Plan to overhaul textile park scheme

The Centre is working out a seven-point revamped Scheme for Integrated Textile Parks (SITP). The move comes at the initiative of the textiles ministry.

The original scheme was approved by the Centre in July 2005. Infrastructure Leasing and Financial Services (IL&FS) was engaged as the project management consultant to help the ministry implement the scheme. A ministry source said the government, however, decided to revamp the scheme after a not-very-encouraging feedback.

The seven-point revamp entails setting up a core group of entrepreneurs as a pre-requisite to schemes, incorporation of special purpose vehicles (SPVs) for effective implementation, tighter norms for land procurement, detailed project reports and appraisal by project consultants. Other changes include a mechanism for ensuring execution of agreements, timely financial closure and effective sourcing of plants and machinery.

"With all this in place, the scheme will be effective like never before," said a ministry source.

The project-specific SPVs would be established by user-entrepreneurs for project development and execution and would include project co-ordinators, auditors, chartered accountants and company secretaries. The SPV boards would also have nominees of project consultants as well. The new norms under consideration prescribe acquisition of land before the release of government support and a bankable detailed project report before the project is approved.

According to the new guidelines, a project would be considered complete only after 25 per cent of the industrial units in the park commence operations. The latest figures on disbursements under the existing scheme show that 22 projects which had received the first instalment of grant till January-February 2007 were expected to be completed by March 2008.

A typical textile park project takes about 24 months to complete. Pre-project activities take up 6-9 months depending on the complexity of the project.

In January, the Cabinet Committee on Economic Affairs (CCEA) sanctioned 26 projects worth around Rs 2,417 crore, of which government support was Rs 862.55 crore.