Swadeshi Mills have already sold a part of the vacant property surrounding the mill to the Reliance group that will be developed into staff quarters for Reliance Petroleum employees. Reliance has invested about Rs 75 crore in the property.

According to sources in Mantralaya, "The permission for the sale was granted after each of the mills had applied for permission to sell off the land to compensate the workers through a voluntary retirement scheme and to redevelop the land."

Officials at Swadeshi mills, owned by Forbes group, said it had already applied for the sale and the application was pending with the state government for a couple of years. The Swadeshi Mills with about 4,500 workers on the rolls had already launched a VRS which came to an end in September.

Nowwith the permission, the management will sell off the plant and machinery to an interested handloom owner in Bhiwandi, senior Forbes group sources told The Financial Express. The BIFR also gave permission to redevelop the land.

According to a research report prepared by Jeff Marsh, of India Property Research, and Chesterton Megharaj, a real estate consultancy firm, there are 58 cotton textile mills in the metropolis of Mumbai. About 26 out of the 58 mills have been designated as "sick" by National Textile Corporation which now controls all but one of these 26 mills.

The Maharashtra government had earlier appointed a study group to advise on the future of the mills. In November 1996, the group had recommended the creation of a corpus to finance redevelopment of private sector mills, since mill owners need funds to compensate workers and find alternative premises before they can offer vacant possession for redevelopment.

According to the India Property Research, surplus land in the mill district isestimated to be over 6 million sq ft, enough to provide housing for at least 3,00,000 people if new development were to happen and to be developed as affordable housing. The employment in the mills has declined from 90,000 to 40,000 in the recent years. The mill owners themselves, particularly in the private sector wish to cash in on the potential property bonanza despite the 1996 slump.

According to the India Research Report, strict labour laws had prevented the mills from being closed or even relocated. Even if the labour, trade unions and the vacant possession issues have all been resolved, there is still the urban land ceiling regulations that the mill owners have to contend with.