The Hindu Business Line : Centre may ease norms for release of capital subsidy for textile parks

THE fund droughtfaced by the promoters of textile weaving parks in bringing seed capital may ease, if the decision of the Ministry of Textiles to change the norm in releasing of capital subsidy from back-ended into upfront is translated into realty.

The Government has now proposed to release the subsidy to these textile parks almost along with the funds being sanctioned by the banks financing such projects, according to Mr Poornalingam, Secretary in the Ministry. As and when the banks release the term loan for the plant and machinery, the Union Government would also simultaneously make available the subsidy to the promoters, he said.

At present, all the subsidy elements incorporated in the Central scheme for textile infrastructure building such as the textile centre infrastructure development scheme (TCIDE), the group workshed scheme (GWS) or the 20 per cent credit-linked capital subsidy scheme (CLCSS) for the decentralised powerloom weavers under the TUFS are back-ended.

This will otherwise mean that the promoters of these parks can claim the subsidies only as a reimbursement after putting in their shares.

According to the Textile Secretary, the decision to advance the release of the capital subsidy to these textile park promoters would in a way serve as a bridge loan for them to meet the fund requirements for starting the park projects without much delay.

At present, one of the reasons that hold back the implementation of the three weaving park projects sanctioned for Tamil Nadu, is said to be lack of funds and the hesitation shown by the banks willing to finance in extending any bridge loan.

The Tamil Nadu Government, which is to provide its share of 25 per cent subsidy for the textile centre infrastructure building project, is believed to have parked some Rs 13 crore or so for these parks and is willing to release it upfront provided the Centre also comes out with a similar offer. This aspect was discussed in the recent consultative meeting the promoters had with the State Government officials.

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