The Cabinet on Friday approved the continuation of a cluster development scheme for the power loom sector aimed at assisting entrepreneurs to set up world-class units.

“The Cabinet Committee on Economic Affairs (CCEA) has given its approval for continuation of Comprehensive Power loom Cluster Development Scheme (CPCDS) during the 12th Plan (2012-17),’’ Information and Broadcasting Minister, Manish Tewari told reporters in New Delhi after the meeting.

The Cabinet also cleared the plan for modification of norms of the scheme for development of Power loom Mega Clusters at Ichalkaranji, Bhiwandi (Maharashtra) and future projects. The modified scheme with an outlay of Rs. 110 crore for the 12th Plan will be implemented through a Public-Private-Partnership (PPP) model, an official statement said.

In 2008-09, the government had launched the CPCDS for development of Powerloom Mega Clusters at Bhiwandi and Erode (Tamil Nadu) during the 11th Five-Year Plan, with a budget provision of Rs. 70 crore for each cluster. Later on, the government announced development of two more Powerloom Mega Clusters at Bhilwara (Rajasthan) in 2009-10 and at Ichalkaranji (Maharashtra) in 2012-13.

The scheme is aimed at assisting the entrepreneurs to set up world-class units with modern infrastructure, latest technology and adequate training and human resource development inputs along with appropriate market linkages. The important changes approved in the modified guidelines in the current Plan with reference to the existing projects include changes in the investment ratio.

The funding will be in the ratio of 60 per cent government and 40 per cent private from the earlier 40 per cent government and 60 per cent private. Also, the overall limit of CPCDS grant has been reduced to Rs. 50 crore from Rs. 70 crore (each cluster) in the 11th Plan and the investment would be in the brownfield projects which was earlier allowed in greenfield and brownfield.

This sector plays an important role in the textiles economy in terms of fabric production and employment generation. As on March 31, 2011, there were about 5.18 lakh power loom units with 22.92 lakh power looms.