Govt's subsidy schemes, tech upgradation to aid 2.5 mn ailing powerlooms

On offer: max 20% of project cost as margin money subsidy, 6% interest subvention for five years

The government has introduced subsidy schemes to provide financial assistance of up to 90 per cent under the Pradhan Mantri Credit Scheme for powerloom weavers. Under this scheme, the government will provide margin money subsidy of up to 20 per cent of the project cost with a ceiling of Rs 100,000 as well as interest subvention at six per cent per annum for working capital and term loan up to Rs 10,00,000 for a maximum period of five years.

The government has also introduced technology upgradation plan — Sustainable and Accelerated Adoption of efficient Textile technologies to Help small Industries (SAATHI) — for India's ailing powerloom sector.

“This initiative is expected to benefit almost 2.5 million powerloom units across India, which produce 57 per cent of the total cloth in the country. The use of efficient equipment would result in energy savings and cost savings to the unit owner who would in turn repay in instalments to EESL (Energy Efficient Services Limited) over a three- to four-year period,” said Ujwal Lahoti, chairman, Cotton Textiles Export Promotion Council (Texprocil).

The schemes provide for powerloom units to not only upgrade their technology, but also to install solar power equipment to cut energy costs. After repayment of bank loans in three-four years post installation of efficient technology, the cost of electricity for powerloom units will become virtually zero, say experts.

“The Union Textile Ministry and state governments have announced several promotional schemes for powerloom textile industry, but there is hardly any awareness of the schemes in the industry. The maximum benefit of these schemes has been taken by the entrepreneurs of Gujarat and Tamil Nadu. The solar energy scheme for small powerloom units will help the unit to pay back bank loans within 3-4 years. After this initial repayment period however, the unit shall get practically free electricity,” said Kavita Gupta, Textile Commissioner while speaking on the occasion of the buyer-seller meet in Mumbai. 

Of the 2.5 million powerlooms, 50 per cent are in Maharashtra. There are 108 powerloom clusters in the country and 72 textile parks.

While welcoming the increase in the Merchandise Exports from India Scheme (MEIS) from two-four per cent, Lahoti urged the government to include cotton yarn under this scheme and also increase the MEIS on cotton fabrics from two to four per cent.

“While every other segment in the textile value chain, including man-made fibre spun yarn, has been provided with the MEIS benefits, cotton yarn has been excluded for some inexplicable reason, even though it was included in the Focus Market Scheme (FMS), Incremental Export Incentive Scheme under the earlier Foreign Trade Policy. At present, there are no benefits extended to the export of cotton yarn under the Foreign Trade Policy,” Lahoti said.

The spinning sector with its huge investments is presently passing through difficult times and is losing market share to Vietnam and Indonesia due to increasing costs. Withdrawal of the export incentives for cotton yarn has reduced India’s competitive edge as local prices have increased by 5-6 per cent. Increase in exports of cotton yarn will benefit not only the spinning sector but also the cotton farmers and the value-added segments of fabrics and made-ups/garment, he added.