A decision on whether to co-opt commercial banks or not has been left to the Industrial Development Bank of India (IDBI), the nodal agency for funding TUF scheme projects for units in organised sector of the textile industry.

According to textile secretary Shyamal Ghosh, "The decision to co-opt other banks/agencies or not has been essentially left to IDBI. The big projects have to be appraised only by the financial institutions." Following the textile secretary's disclosure here on Wednesday the whole issue of co-option sought by big units is back to square one.

The Small Industries Development Bank of India (Sidbi) had recently announced its willingness to operate the TUF scheme through its associated banks and state finance corporations by co-opting them numbering around 100. The decision came after series of meetings with the Union textile ministry.

Sidbi's decision would enable small units to avail funds at a lower cost. Moreover, the nodal agency for textile units in the small scale/decentralised sector enhanced the loan ceiling from Rs 1 crore to Rs 3 crore and it has also agreed to cover those requiring less than Rs 50 lakh.

In fact, the textile ministry officials have been pressing for co-option by nodal agencies to have better reach for the scheme as the user-industry would have access to funds cheaper by at least 3 per cent.

Textile commissioner BC Khatua, who is also the convener of the technical committee of the scheme, had earlier claimed during his visit to Coimbatore that without co-option the scheme would lack sufficient thrust.

Meanwhile, Ghosh claimed around 91 applications for a total project cost of Rs 7,000 crore under the scheme were processed by the FIs till mid-July. Around Rs 590 crore has been sanctioned and Rs 35 crore disbursed under TUF. For the first quarter of the fiscal, it may be noted, around 83 applications for a total project cost of Rs 2,500 crore were processed, Rs 450 crore sanctioned and Rs 21 crore disbursed.

The textile secretary said import of used machineries would not be encouraged under the scheme. "The idea is to modernise the industry with latest machines to improve production, productivity and quality," he said. The scheme is only for modernisation and technical upgradation of good units and not for revival of sick industry, he said.

INSIGHT:

Sathyam panel proposals under processing

The high-powered Sathyam Committee's recommendations for a new textile policy is being processed by the textile ministry.

Textile secretary Shyamal Ghosh said the recommendations after processing would be placed before the Government. This could in all probability be after elections.

The committee's recommendations for a new textile policy to make the industry competitive, taking into consideration the free-quota regime beyond 2004, contain around 215 recommendations. The 450-page report, submitted on August 3, has many radical proposals aimed at a thorough overhaul of the industry.