Rs 500 cr sought for debt recast of textile sector

 The textiles ministry has asked the finance ministry to recast the debt restructuring package for the textile sector on the lines of the NK Singh Committee's recommendations, which sough the setting up of an initial corpus of Rs 500 crore.

"The present scheme of using the external commercial borrowing (ECB) route to raise funds for restructuring is proving more tedious as many financial institutions are not in a position to raise it. We have sent a representation to the finance ministry suggesting the setting up of a refundable corpus of Rs 500 crore on the lines of the NK Singh committee report," a senior ministry official told Business Standard.

The NK Singh Committee had suggested the creation of a Textile Industry Reconstruction Fund with an initial corpus of Rs 3000-4000 crore for financial restructuring of viable and potentially viable units. The committee had recommended that the selection of the units would be based on strict eligibility criteria. The Finance Ministry is the nodal ministry for monitoring the Debt Restructuring package. 

As per the data compiled by the textiles ministry from various financial institutions and banks, of the 186 applications for restructuring filed by the textile units, 130 cases have been approved for restructuring, an official said adding that the ministry had asked the Indian Cotton Mills Federation to give the ministry further details on how many companies had benefited from the present restructuring package. 

Officials said that the Rs 500 crore would be a refundable fund which companies after restructuring would be required to pay back to the government.