Govt Announces Norms for Textile Parks Scheme

THE Government has set out the guidelines for the `Scheme for Integrated Textile Parks (SITP)', aimed at establishing 25 new textile parks of international standards with world-class infrastructure facilities and based on public-private partnership.

Born out of the merger of two extant schemes - the Scheme for Apparel Parks for Exports and the Textile Centre Infrastructure Development Schemes - the SITP gives the option for switchover to the new scheme to the ongoing projects under the earlier schemes.

All projects sanctioned but not started before July 31, 2005 would be cancelled.

Each Integrated Textile Park (ITP) would normally have at least 50 units with a total estimated investment of Rs 750 crore and on average provide employment to 20,000 persons.

Hence, 25 such textile parks on completion would create five lakh new jobs.

The Centre would provide Rs 625 crore for the development of these 25 ITPs in a two-year span between 2005-06 and 2006-07.

The ITPs might also be set up in the Special Economic Zones, in which case the special provisions of SEZs would be applicable to them.

They could also be set up outside SEZs, in which case proposals might be pursued with the Ministry of Commerce & Industry to declare the ITP as SEZ, if so desired.

The Ministry of Textiles would implement the scheme through Special Purpose Vehicles but the latter will have operational autonomy so that they do not become surrogate public sector enterprise or be controlled by the Centre or the State Governments.

Industry associations and groups would be the main promoters of the ITPs.

The Ministry would sign a MoU with Infrastructure Leasing & Financial Services or analogous professional agency that has substantial experience and expertise in the realm of infrastructure development, as Project Management Consultant (PMC) for implementing the scheme.

The PMC would be responsible for the expeditious execution of the projects in a transparent and professional fashion so as to ensure high degree of quality at a low cost acceptable to the members of the SPV and for which fee would be disbursed to the PMC.

At each ITP, there would be a separate SPV formed with the representatives of the local industry, financial institutions, and State and Central Governments.

The SPV should invariably be a corporate body registered under the Companies Act; any different structure for the SPV would require the approval of the Project Approval Board headed by the Textile Secretary.

Being the focal points for the implementation of the scheme, the SPVs would build the infrastructure, do site allocation to industry for setting up units, and facilitate securing bank finance required for setting up units in the ITP.

The SPV has to be so structured as to be self-sustaining with a positive revenue stream.

State Governments would be requested to participate in the SPV in order to facilitate proper co-ordination.

Central support by way of grant of equity would be limited to 40 per cent of the project cost, subject to a ceiling of Rs 40 crore. This could be extended as grant or equity to the SPV.

However, the combined equity stake of Government of India, State Government, and State Industrial Development Corporation, if any, should not exceed 49 per cent.

On release of funds, 30 per cent of the total GoI share would be advanced immediately after approval of the project by the project approval board, subject to clearance by the financial institutions about the project being bankable and the procurement of the land for the ITP by the SPV; 30 per cent of the total GoI share after the utilisation of the first instalment and after the proportionate expenditure (i.e., 30 per cent of the share of SPV) would been incurred by the SPV; and 30 per cent of the total GoI share after utilisation of the second instalment and after the proportionate expenditure (i.e., another 30 per of the share of SPV) has been incurred by the SPV. Ten per cent of the total GoI share would be released after successful completion of the project and after 25 per cent of the units in ITP start production.

The SPVs would forward their claims to the Textiles Minsistry after verification by PMC supported by documents such as utilisation certificate.

Separate accounts would be kept by SPV for the funds released by GoI, which would be subject to audit by the CAG.

User charges would be fixed for various facilities and services by SPV and there shall be full recovery of operational and maintenance costs through user charges.

The recovery by way of lease rentals should accrue to the SPV for plough-back for future expansion.