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State announces huge incentives for powerlooms; processing sector next in line

The Maharashtra government has finally come out with its modernisation and restructuring scheme for the powerloom sector, which offers a large number of incentives to the powerloom units in the state. And the government is now planning a similar scheme for developing the processing sector in the state. A report by Reena Mital.

The powerloom sector in Maharashtra has welcomed the Maharashtra government’s modernisation and restructuring scheme for powerlooms, which provides a large number of incentives to the units in the state, by way of capital subsidies, loan and interest rescheduling, concessions in power costs, etc.

Speaking to Express Textile, Mr Prakash Awade, minister of state for textiles, government of Maharashtra said, “We had put forward as many as 23 proposals for the development and turnaround of the powerloom sector, all of which have been accepted by the Maharashtra government, with a few changes. I expect a lot of investments coming into this sector within the next six months, and we will see a lot of very good developments in powerlooms.”

The powerloom industry too is upbeat about this scheme, which will reduce the burden of interest on the units by 50 per cent. The government will pay back 50 per cent of the loans of the powerloom units, amounting to around Rs 25 crore. The remaining 50 per cent of the loans will attract a five per cent interest subsidy. New loans too will have this subsidy. “This will help us a lot as a large number of units today are unable to function due to the heavy financial burden they are bearing. It will drastically reduce the NPAs in this sector, and help in the turnaround of the units,” said powerloom owners from Solapur. Moreover, the Maharashtra government will also give a 35 per cent capital subsidy to the units and a five per cent subsidy on working capital and term loans. This will be in addition to the 20 per cent capital subsidy for powerlooms under the technology upgradation fund scheme (TUFS).

Unlike the TUFS, which allows import and installation of second-hand machines that are not more than 10 years old, the Maharashtra government’s scheme has put no such restrictions on use of second-hand machines. Says Mr Awade, “The powerloom sector today works with obsolete technology. Even a 15 year old machine will still be a shuttleless loom, and will mean a higher level of technology than that being replaced.”

Another important incentive under the scheme is the reduction in the power cost to just Re 1 per unit, as against the existing Rs 2.80 per unit. “And all powerloom units in the state, whether situated in an industrial zone, commercial zone or residential zone will be granted D+ status, which involves a whole lot of incentives.” A D+ status is given to units in areas of very low industrial development. The benefits to the units in these areas include octroi refund, stamp duty exemption, cash subsidy for small scale industry units, interest subsidy for textile units, concessions in electricity duty, 30 per cent fixed capital subsidy limited to Rs 25 lakh. For labour, the ministry is insisting that apart from minimum wages, the units should link wages to production.

According to powerloom owners, “With such a lot of incentives, there are absolutely no hurdles now towards development and modernisation of the sector. In fact, units will increase production capacity, move towards production of higher value items, and will become very competitive in the market.”

According to Mr Awade, “We expect banks to now become proactive towards the powerloom sector, because of the government security that they would get. The aim of my ministry has been to bring back garment production into the state. Powerlooms today account for a very high percentage of fabric production, and making available the right kind of raw materials at competitive prices to the RMG sector will strengthen this sector too. Moreover, powerlooms provide employment to lakhs of people, and we could not let it continue operating in a haphazard manner with no direction.”

Even as this scheme will strengthen the powerloom sector, the mill sector would get further affected. “The mill sector should now concentrate on processing. We have very few state-of-the-art processing units in the country, and these are insufficient to process all the fabric being produced. We are in fact, now planning a development scheme for the processing sector too. We will call the industry for discussions to understand the problems they face in the state, with regard to infrastructure, finance, etc. And then come out with a scheme for them too,” informed Mr Awade.