The Hindu : Allow mills to take NABARD loans

Online edition of India's National Newspaper
Wednesday, Feb 27, 2002

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Allow mills to take NABARD loans

By Our Special Correspondent

NEW DELHI FEB. 26. The apex organisation of textile mills, Indian Cotton Mills Federation, has urged the Government to allow textile mills to secure concessional loans from NABARD to tide over the acute financial crisis being faced by the sector.

In a communication to the Finance Minister, Yashwant Sinha, the Chairman of the Federation, Rajaram Jaipuria, has urged that mills should be allowed to take term loans from NABARD at the same interest rate as that available to agricultural sector. Since cotton textile is an agro-based industry, it should be treated on par with other segments of agriculture, the letter said.

The Federation also called for lowering of the margin money charged on working capital for the textile industry to a level of 10 per cent at least for three years, with an increase to 15 per cent in the fourth year, and 20 per cent in the fifth year, and for re-introduction of investment allowance of 25 per cent to encourage new investments in the textile industry.

Several developed countries like Germany and France offer such incentives to their industry to give a boost to capital formation.

Besides, it wanted a cut in the interest rates on both new and existing loans taken by the textile industry from banks and other financial institutions, extension of income tax benefits to export oriented units upto 2005, abolition of MAT and dividend tax, and increase in interest subsidy under the TUF Fund Scheme to eight per cent from the present 5 per cent.

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