The package was evolved at a high-level meeting chaired by textile minister Kashi Ram Rana and attended by financial institutions and commercial banks to tide over the problems of the textile industry hit hard by cost escalation and demand recession in the wake of the east Asian currency meltdown.

As part of this package the Indian Banks' Association has agreed that as long as cotton is procured for production and not for speculative purposes there will be no shortage of funds for textile units.

The possibility of more liberal credit terms for export to non-quota countries was also discussed and it was decided that a longer period for realisation of proceeds could be considered by the RBI on a case-by-case basis.

On the issue of modernisation funds for powerloom units, it was indicated thatthe setting up of a technology upgradation fund (TUF) for the textile industry was under active consideration and was likely to be cleared within a month. The fund will be available to all the major segments of the textile industry across the board.

Tuesday's interaction was the third of its kind initiated by the ministry to discuss problems of the textile industry especially in the context of the Asian currency crisis leading to sharp drop in exports of cotton yarn to South East Asia and the consequent demand recession.

Problems highlighted by the industry related to non-availability of finance from banks which insist on unfavourable norms of current ratio of 1:1.33 and a high margin of 20 to 25 per cent resulting in further curtailment of bank credit and the general reluctance of the banks for rescheduling of term loans.

Shyamal Ghosh, textiles secretary, D P Bagchi, additional secretary ministry of textiles, participated in the meeting which was attended by senior representatives of IBA, RBI,ministry of finance, Exim Bank, Clothing Manufacturers Association of India (CMAI),Indian Cotton Mills Federation (ICMF), Powerloom Development and Export Council, Indian Wool Manufacturers federation (IWMF), South India Small Spinners Association besides some other members from industry associations.

The textiles secretary had interacted with representatives of financial institutions and RBI in August this year on the issue of lending norms on preferential basis while considering viable cases so that units going through a tough patch can get relief. This was followed by a meeting with the IBA in Mumbai last month.

It was agreed at these interactions that there must be concerted effort by all concerned to resolve the problems of the textiles industry which plays an important role by accounting for 20 per cent of industrial production, 8 per cent of GDP and 33 per cent of the country's total foreign exchange earnings. It also provides direct employment to about 20 million and indirect employment to manymore.