New Delhi: The Government of India has approved a Rs 350 billion-debt restructuring package for the ailing textile sector, Union Textiles Minister Anand Sharma said.
"The total outstanding debt of textiles sector is Rs 155,809 crores (Rs 1.55 trillion) of which debt of Rs 35,000 crores (Rs 350 billion) needs restructuring," a Ministry of Textiles statement said earlier Tuesday.
An inter-ministerial committee of senior officials will be constituted to coordinate between the industry and banks to speed up the restructuring, the statement said.
The government will direct banks to consider restructuring the loans of the crisis-ridden textile on a priority basis, it added.
Further, the Ministry of Finance in consultation with the Reserve Bank of India will examine a two year moratorium on term loans and special provision in non-performing assets (NPAs) norms to avoid asset reclassification, among others, the statement said.
Industry groups welcomed the move, which is expected to benefit about 2,000 cotton textiles mills and man-made fibre segment that were sharply hit by global economic slowdown, high interest rate regime and volatility in raw material prices.
"It will help mills pull through the crisis they are going through because they don't have working capital to buy raw material," Confederation of Indian Textile Industry Secretary General D K Nair said.
India's textile industry, which provides direct employment to over 35 million people, contributes about 11% to industrial production, 14% to the manufacturing sector, 4% to India's gross domestic product (GDP) and 12% to the country's total export earnings, according to the Confederation of Indian Textile Industry.