Textile sector in Maharashtra has a new reason cheer as the State government is planning to introduce a scheme similar to the Technology Upgradation Fund Scheme of the Centre, which will provide interest subsidy to new textile units in the State.

Senior Maharashtra Government officials said that the scheme hopes to bring about Rs 40,000 crore worth of investment in the next 10 years, which will require over Rs 3,000 crore budgetary support.

Maharashtra is one of the top cotton producing States in the country but it does not have a well-developed textile industry. The new initiative aims to develop the industry and take it to the next level.

“Maharashtra's estimated cotton production for 2010-11 is about 92 lakh bales, while the consumption is mere 19 lakh bales. The remaining cotton is sent to other States for processing. When cotton is produced here, it makes more sense to produce the final textile in the same location,” officials said.

Independent market research has shown that 1 kg of cotton costing about Rs 125 can be converted into four shirts of around Rs 1,500, which means 12 times value-addition. Such is the potential of textile sector in the State, officials said.

Currently the State government provides subsidy in the form of 50 per cent equity to the textile companies wanting to set up new units but the government does have a control over the way in which the money is spent by these units. In the new scheme, equity would be raised by the units independently but the debt would be serviced in the form of interest subsidy, officials said.

The new scheme will ride along with TUFS scheme and has a potential to provide employment to over 10 lakh person in Maharashtra. This scheme will be a part of the new textile policy, which would be soon announced, officials said.

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