The Hindu Business Line : SIDBI, IL&FS in pact to develop textile parks

TO boost small and medium textile units, IL&FS and SIDBI Ltd have come together to provide infrastructure and financial support to develop textile parks.

Under an MoU signed between the two institutions on Wednesday, IL&FS will give infrastructure and marketing support and SIDBI will provide short-term and long-term capital.

The MOU was signed by Mr Ravi Parthasarathy, Chairman and Managing Director, IL&FS and Mr N. Balasubramanian, Chairman and Managing Director, SIDBI, in the presence of Mr Vinay Rai, Banking Secretary, Ministry of Finance.

Based on the public-private partnership principle, these textile parks will see the central and State governments working together with the owners of the weaving and processing units and the two financial institutions, said an IL&FS official.

SIDBI-IL&FS combine has already identified seven textile parks — four in Tamil Nadu, two in Andhra Pradesh and one in Karnataka — for development.

The first to be taken up will be the one in Hyderabad. The entrepreneurs in the park will form a special purpose vehicle to develop the park. They will contribute 20 per cent of the entire cost of setting up and maintaining the park. The Government grant forms 40 per cent and institutions will meet the remaining 40 per cent.

If required, SIDBI and IL&FS will also prepare to pick up equity in the SPVs.

Mr R.C.M. Reddy, Chief Executive Officer, IL&FS, in-charge of SME cluster, said, "The problem is the bridge financing. The government grant is on reimbursement basis. So, many clusters were held up due to financial problems. SIDBI-IL&FS MoU will help financing this gap."

Each of these parks will have land, infrastructure such as road, water supply, power supply, telecommunication, factories, plant and machinery for individual entrepreneurs.

The SPV will also provide other linkages such as marketing of the finished goods, once the park is set up, Mr Reddy said.

These textile parks are likely to see additional investments of Rs 10,000 crore during the next two years. The capacity of the park is likely to double from the current 25,000 looms, he added.

Exports from the textile industry are likely to increase by Rs 15,000 crore once the textile parks are set up.

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