The Centre, on Tuesday, approved a Rs.35,000-crore debt restructuring package for the textile sector, which has been faced with massive unemployment and shutdown of business.

An announcement in this regard was made by Commerce, Industry and Textile Minister Anand Sharma, who met Finance Minister Pranab Mukherjee on Tuesday to seek a resolution on the issue, impacting lakhs of people employed in the sector.

According to an official statement issued here, during the meeting, it was agreed that there was a need to support the industry in this crisis time.

Total outstanding debt of the sector stands at Rs.1.56 lakh crore, of which debt worth Rs.35,000 crore needs restructuring. “Directions would be issued to banks in this regard to consider this on a priority basis,'' the statement adds.

Mr. Sharma said there was an agreement with the Finance Ministry that the debt restructuring package would be considered on a case-by-case basis by banks. The Finance Ministry would examine, in consultation with the Reserve Bank of India, for a two-year moratorium on term loans, special provision in NPA norms to avoid asset reclassification and working capital eroded to be converted into working capital term loans, repayable over 3-5 years.

An inter-ministerial committee of senior officials would be constituted to coordinate with the industry and banks on expeditious restructuring.

Textiles industry associations had represented to Mr. Sharma pointing to the high stress levels and industry sickness. They sought his help to secure revamp package.

Earlier, the Finance Ministry had constituted a committee under the Chairmanship of M. D. Mallya, Chairman of Bank of Baroda, for examining the restructuring proposals for the sector.

Apparel Export Promotion Council Chairman A.. Sakthivel thanked Mr. Sharma and Mr. Mukherjee for granting the debt restructuring package and giving relief to the industry.

Mr. Sakthivel said textile companies had suffered losses on account of global slowdown and unprecedented volatility in prices of raw material, including cotton.

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