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| Having dealt a body blow to the textiles industry over the past few decades by way of concessions to small-scale units like powerlooms, the government is now trying its best to repair the damage before trade quotas are abolished on January 1, 2005. |
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| While a Technology Upgradation Fund Scheme was set up in 1999-00 to provide subsidised funds to the industry, another fund for restructuring its debt is on the cards. |
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| Part of the funds required for this will come from the government. |
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| As for the bias against larger units, the Budget for 2003-04 did a lot to rectify this. |
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| According to estimates by the Steering Group on Investment and Growth in Textiles, headed by Planning Commission Member N K Singh, the industry needs fresh investments of around Rs 98,000 crore in order to become competitive. |
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| The group has recommended various options and a decision is expected soon, but broadly, it has recommended that existing loans be restructured in a way that interest rates are around 13-14 per cent, against 17-18 per cent now. |
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| Financial institutions, which have around Rs 20,000 crore exposure to the textiles industry, will have to bear the burden of any interest rate reduction. |
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| The Textile Industry Reconstruction Fund will provide a subsidy of around 4-5 percentage points worth of interest payments, effectively lowering interest rates to 8-9 per cent for borrowers that qualify for restructuring. |
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| According to Chintan Parikh, chairman of the Indian Cotton Mills Federation, which hired Deloitte Haskins & Sells to prepare a restructuring plan, the government needs to spend just around Rs 400-500 crore a year to facilitate restructuring of around Rs 10,000 crore worth of assets. |
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Says Parikh:
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