The scheme is intended to give the industry access to timely and adequate capital at internationally comparable rates of interest for upgrading its technology and improving its competitiveness as well as long-term viability. Under the scheme Rs 25,000 crore are expected to be made available to the textile industry over a five year period at the rate of about Rs 5,000 crore per year at a concession of 5 per cent in interest rates charged by institutions. The burden of this interest-rate difference is to be borne by the Centre.

It might be interesting to note that at the end of November 1999 there were 1,837 textile mills in the country - comprising 1,555 spinning and 282 composite units. Of them only 54 spinning mills and 27 composite mills in the organised sector seem to have applied during the year for assistance under the scheme. They were sanctioned Rs 536.15 crore and Rs 1,143.10 crore respectively, but actual distribution has amounted to just Rs 185.68 crore and Rs 208.03 crore respectively.

Some units in the unorganised sector also applied under the scheme. If they are also taken into consideration 76 units in the spinning sector were sanctioned Rs 546.58 crore, with actual distribution of just Rs 188,45 crore. About 19 units in the weaving sector were sanctioned 124.80 crore with actual distribution of Rs 35.03 crore, while 37 composite units were sanctioned Rs 1,153.21 crore, with distribution of meagre Rs 210.32 crore.

That apart 46 processing units were sanctioned Rs 294.16 crore and were disbursed Rs 188.20 crore. Also 33 garment units were sanctioned Rs 67.94 crore but actually given Rs 31.06 crore. Only one unit in the made-up segment applied and was given Rs 0.76 crore while 25 knitting units actually got Rs 5.23 crore against sanctions of Rs 19.57 crore. Five units in the fabric embroidery segment were sanctioned Rs 21.55 crore, but no disbursement had yet been made to them by the end of the year. Some applications from the man-made fibre, silk and jute segments were also made.

In all, 361 applications were submitted from all segments of the textile industry for assistance under the scheme. Of them, only 271 were sanctioned Rs 2,316.33 crore, but actual disbursements to them during the year amounted to just Rs 697.66 crore.

When asked why the response to the scheme particularly from the organised textile mill sector was so poor, sources close to the industry explained that though the rate of interest under the scheme was quite reasonable, the industry would not go in for any additional investment, unless it is sure of a reasonable return on it. This was very much in doubt at present. Any modernisation programme taken up at this stage might easily take about two years to complete. Even now imported fabrics have shaken the confidence of the industry so much so that it might not think of additional investments even if funds were available free of interest.

Cement units which were in difficulties were being taken over by others, but there was no takeover of any textile mill these days. That meant that even outsiders were not confident of the domestic textile industry's future. Particularly in larger cities like Mumbai, the costs are too high to make any modernisation plan viable. Had the industry been enabled to shift to the interior where costs might be low, things could have been different.

Most Indian business houses started with the textile industry. Besides India has some other advantages like domestic availability of raw materials, plenty of labour and a tradition of textile manufacturing, but the Government machinery has been extremely slow in taking appropriate decisions to rejuvinate the industry. Unless the Government attitude towards this industry changes, few units would be inclined to make any fresh investments in this industry to whom the Government is not inclined to give any relief from the crippling tax burden. Mere TUFS may not inspire confidence in the industry, they argue.