The Hindu Business Line : SIDBI facility opens new window for textile units' update in Tirupur

THE recently floated World Bank sponsored line of credit (WB-LC) for the cluster-based small and medium enterprises, operated by the Small Industries Development Bank of India (SIDBI), is turning out to be one more window of low-cost financing of modernisation projects for the textile industry.

Thanks to the cluster-specific credit facility envisaged under the scheme, this credit line is positioned by the SIDBI to meet the long-term funding needs of the Tirupur-based knitwear industry, which is pursuing capacity expansion and modernisation.

Tirupur knitwear is among the select cluster-industries of SMEs identified to extend the credit line and the term loan for capital expenditure provided under this route too brings the Union Government's technological upgradation fund scheme (TUFS) benefit of five per cent discounted interest entitlement to the borrowers.

`Within the short period of its introduction, we have received 23 proposals from the knitwear units and 50 per cent of these proposals were sanctioned and funds disbursed' , said Mr Mani Krishnaiyar, SIDBI's Tirupur branch head.

These units are investing on new generation knitting machines, embroidery units or stenter machinery as part of their expansion programme.

Besides knitwear sector, the SIDBI has identified foundry units in Coimbatore, auto ancillaries of Chennai, food processing in Pune, surgical instrument making cluster in Kolkata and the Gurgaon-based autocomponent units for deploying the LoC funds.

The credit offered could be either rupee term or in foreign currency and the rate at which the rupee loan offered is 9.5 per cent; but for the textile units, the effective rate after the five per cent interest subsidy reimbursement could be below five per cent tag.

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