This and other relaxations of the scheme which will be in force for five years till March 31, 2004 date follow representations from trade and industry associations.

Energy devices such as effluent treatment and water treatment plants will also be considered without any ceiling on investment.

In the case of partly disbursed loans, borrowers will be allowed to avail of the benefits of the scheme by submitting a fresh project conforming to the norms to the lending agency after terminating the existing loan cases. Further, yarn processing has been made an additional eligible downstream value-addition activity for investment in new or expanded spinning.

Moreover,the preliminary and pre-operative expenses and incremental margin money on working capital have been included as eligible investment under the scheme. Expenses on training and payment of fees to foreign technicians would also be eligible.

Under the scheme, textile and jute mills intending to go in for modernisation will be able to avail of loans from the designated public financial institutions at interest five percentage points lower than their normal lending rates.The difference will be reimbursed as interest subsidy by the government to the institutions.

The scheme is an "open-ended"one with no limit on fund availability.It will depend on the capacity of the units to absorb funds in economically feasible, viable and bankable projects.

The focus of the scheme is on technology upgrading in the existing and setting up of new high-tech units. Technology upgrading would mean induction of state-of-the-art or near-state-of-the art technology.

However, step-by-step approach for the segments which are lagging far behind in the technology level will also be permitted.

The technology levels are bench-marked under the scheme in terms of specified machinery for each segment of the textile industry.

As on October 31, 1999,a total amount of Rs 1,888.03 crore has been sanctioned to 91 eligible cases under the scheme.

During the Seventh Plan, a textile modernisation fund scheme had been in operation from August 1986 for five years with an initial corpus of Rs 750 crore for granting assistance at concessional rate of interest. The spinning sector emerged as a major beneficiary of the scheme with other sectors taking a relatively minor share.

The textile industry contributes 20 per cent of the annual value-addition in the manufacturing sector and accounts for more than 30 per cent of total exports.