Capital subsidy extended to self financed textile units

Textiles minister Chandrakant Patil announced the policy of the Maharashtra Government to extend a capital subsidy to those textile units which are self-financed. Initially, Capital subsidy was allowed only for those projects that were financed by banks.

Sunil Porwal, Additional Chief Secretary (Textiles), Maharashtra said that they were encouraging mills to take loan from banks by allowing capital subsidy only on banks’ financed projects mean. For the first time, the Government is encouraging investors with self financing. The government might resolve the stressed assets issue temporarily.

He suggested the government of India should also implement a similar measure at the national level to revive the ailing textiles units.
He added that Maharashtra has come out with this policy to incentivize textile industrialists who are ready to put in their own money in their units.

The problem of stressed assets has been caused because there has not been a disincentive to take credit and an incentive to self-finance The policy to incentivize self-finance makes sure that the promoter’s equity is raised.

In addition, self-financed textile units in Vidarbha, Marathwada, and North Maharashtra regions—which produce almost all of the state’s cotton—will also be eligible for 25-35% capital grants from the state.

Industry minister Subhash Desai said the Maharashtra Industrial Development Corporation (MIDC) was setting up 10 integrated textile parks in the state. They are developing these parks in Vidarbha, Marathwada and North Maharashtra where cotton is produced. They are targeting an investment of Rs.40,000 crore in these parks which would generate more than 11 lakh jobs.

The state government has reduced the premium on MIDC land to encourage investors to invest in these parks, Desai said. One of these parks has come up at Nandgaon Peth in Amravati district in Vidarbha where Raymond Industries has signed an agreement for an investment of Rs.1400 crore.

Dilip Jiwrajka, managing director of Alok Industries, which operates four textile units in the Maharashtra, welcomed the initiative. He said textile units in the state should also get cheaper electricity like in neighbouring Gujarat.

R.K. Dalmiya, chairman of the Cotton Textiles Export Promotion Council, said the initiative will give Maharashtra a competitive edge over other textile-heavy state like Tamil Nadu.

This initiative came up at a panel discussion on opportunities in textiles in Maharashtra at the Make in India week to revive the slumping textile sector.