India : Govt, Lenders Ready To Stitch Textile Fund For Sick Mills

Top officials from the ministry of finance, the textiles ministry and a few leading financial institutions (FIs) and nationalised banks are meeting in New Delhi to discuss ways to revive the debt-ridden textile mills of the nation through the Textile Reconstruction Fund (TRF). The TRF was announced by the finance minister in his 2003-04 Budget speech in February.

The meeting assumes importance especially because the government has identified the textiles sector as the second-most important sector after agriculture, and therefore wants to support it at the earliest. The setting up of TRF would help sick textile units to take up the challenges of the post-quota regime beginning January 2005. For various reasons, the sick textile units have not been able to meet their debt obligations and TRF would help them in meeting the same.

In this direction, last week The Indian Cotton Mills’ Federation (ICMF) and the Southern India Mills Association (SIMA) had jointly submitted a proposal to the textile ministry.According to ICMF, TRF should have a corpus of around Rs 5,000 crore to be funded fully by FIs and banks. This fund should be deployed towards providing interest deferment facility (IDF) up to a maximum of four per cent and limited fresh financing up to a maximum of 30 per cent of outstanding institutional term loan for eligible units.