While IDBI will be involved in fund disbursal to large composite textile mills, IFCI and Sidbi will finance jute mills and the small-scale sector, according to union textiles secretary Shyamal Ghosh.

The three-way split is part of the basic proposal, which has received clearance from cabinet sub-committee recently, two years after it was initiated, and is expected to come into effect from April 1999. A provision has been made in the Ninth Plan for the proposed fund.

"The institutions will deploy funds depending upon the bankability of projects," Ghosh Said. Institutional exposure to the textile sector was at Rs 4,000 croreduring calendar 1997, and disbursals from the proposed fund will be over and above the routine disbursals, with a specific focus on upgradation.

Funds will be subsidised to the extent of 5 per cent and no specific amount has been earmarked for any particular sector, Ghosh said.

Weaving and processing sectors will be given weightage in the disbursal of funds as spinning sector has made maximum use of a similar type of fund in the Seventh Plan, the textiles secretary said, adding that institutions have been approached to reschedule loans advanced under the earlier upgradation plan.

Non-availability of funds at lower rates has long been hampering the prospects of textile mills with countries like Pakistan outnumbering India in terms of modern looms, said industry sources.

In China, there are around 60,000 modern looms as funds have been provided even at 3.5 per cent. Modernisation could definitely help the sector to function more effectively in a quota-free regime, sources said.

Though India is thethird-largest cotton-producer, sputtering productivity standards are proving a bane for the industry. While global productivity is estimated at 540 kg per hectare, India produces 340 kg per hectare.

The proposed cotton-technology mission is expected to improve upon productivity, sources said.

As the mission address the issue of falling productivity, a commitee has recently been constitued under the chairmanship of former textiles secreatry SR Satyam to bring about radical changes in the industry. The committee is expected to submit its report by the end of December.

The commitee, for the last two weeks, is involved in discussions with various industry representatives. It will, sources said, take a holistic approach, which implies a greater coordination among different sectors in the industry.