Last updated on December 17th, 2019 at 05:03 pm

IndiaFilings » Learn » Government Initiatives » Scheme For Integrated Textile Park (SITP)

Scheme For Integrated Textile Park (SITP)

To afford a world-class infrastructure and to build trust in the Textile Industry, the Indian Government has launched a Scheme for Integrating Textile Parks (SITP).

About the Scheme

In the year 2005, the Government of India launched the Scheme for the Integrating Textile Parks, by incorporating two Schemes:

1. Apparel Parks for Export Scheme (APES) and
2. Textile Centre Infrastructure Development Scheme (TCIDS)

Furthermore, the SITP scheme is a model illustrating a ‘USER DRIVEN’ approach, with independent possession of the Micro, Small and Medium Enterprises (MSMEs). The SITP Scheme enabled an establishment of more than 40 Textile Parks, yielded more than 3500 Crores and generated employment for 15000 textile workers.

Objective of the Scheme

1. The scheme operates to provide funding for private entrepreneurs to construct textile units with all the world-class infrastructure features.
2. Identify the well-groomed location for the Textile Units to meet the geographical, social and international standards.
3. Bring considerable growth in the export rate.
4. Generate huge employment opportunities.

The SITP project plays an effective role as a supporting cause in MSME development, as it routes to huge employment.

Eligibility Criteria

Ministry of Textiles has formulated a nodal agency to identify and monitor eligible projects and disburse the necessary funds to SPV. The SPV comprises of,

1. Industrial Associations.
2. Entrepreneurs Association.
3. State Government Agencies that fall into the main promoters of the Integrated Textile Parks (ITP).
4. The Special Purpose Vehicle (SPV), a corporate body registered under the Companies Act, is assigned for the execution of the ITP.
5. A Special Purpose Vehicle (SPV) is formed at each ITP by the Representatives of Local Industry (RLI), State Industrial and Infrastructural Corporation (SIIC) and other bodies of GOI.
6. The net worth of each promoter should not be less than 1.5 times their total equity proposed in the project.

Infrastructure Features of the Scheme

The Scheme actively involves in the tactical discussions targeting the Industrial Clusters with potential growth location for developing world-class infrastructure support. The Scheme will cover infrastructure, building for production and other supporting activities.

The ITP includes the key elements below:

1. SPV should have the land registered under their name.
2. Infrastructure including drainage, water, compound wall, power, waste treatments etc.
3. Plants & Machinery for the efficient production of ITP.
4. Building

• • labs with equipment
  • training centres
  • canteen
  • hostel
  • offices
  • recreation
  • marketing support

Funding and its Distribution

• The Funds are released in the form of Bank Loans and Grant/Equity by the Ministry of Textiles, State Industrial Development Corporation (SIDC) and Industrial Project Management Consultant (IPMC).
• The Government of India releases the fund of Rs.40 Crores or the amount of 40% of the project budget, whichever is lesser.
• Whereas, GOI supports with 90% of the project cost subject to a ceiling of Rs.40 crores for first two projects (each) in the States of Arunachal, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Tripura, Sikkim, Himachal, Uttarakhand and J & K.
• The nominee of the SPV – Park is the responsibility of the Central Government.

Release of Funds

The release of funds from GOI to the SPV is generally done in three instalment ratios – 30:40:30.

First Installment

The first payment of 30% of the total share to SPV is subjected to the following:

1. An equal amount of Bank Guarantee should be provided by SPV to the Ministry of Textiles.
2. Formation of SPV
3. Rendering the shareholders’
4. SPV should possess the land considered for the Textile Parks in their name.
5. Completion of all the formalities of all statutory clearances obligatory for the project initiation.
6. Issuance of shares by SPV to members with respect to the area allocated to
7. Opening of two bonded accounts (Trust and Retention accounts) in a nationalized bank.
8. The Board of Directors comprising of one professional each from the Central and State.
9. The Textile Commissioner is liable for the operation of these bonded accounts in terms of the Tripartite Agreement (TA).
10. Project Approval Committee (PAC’s) approval certification.

Second Installment

The second payment of 40% of the total GOI share to SPV is subjected to the following:

1. SPV should have incurred expenditure of their proportionate contribution, i.e., 70% of the total SPV share from all the sources.
2. Submission of Utilization Certificate (UC) for the 1st instalment.
3. Providing all the particulars about the equity.
4. An authorization letter to be provided for Loan Section by SPV on availing of loans.
5. The honour of contracts worth 100% of the overall project cost without the land.
6. The Interest on the GOI grant will be refunded/attuned with a Bank Authorization Certificate for claiming the installment.
7. Officer in Charge for the Regional Office of Textile Commissioner to authenticate the Progress report.

Note: The bank Guarantee issued by the SPV shall be returned only when the SPV equals the contribution amount to that of the third installment.

Third Installment

The final and the third payment of 30% of the total GOI share to SPV is subjected to the following:

1. The 100% expense made by SPV share from all the sources.
2. Successful completion of the entire infrastructure.
3. The commissioning of 80% of the scheduled units with the fulfilment of 80% of the assured
4. Submission of Utilization Certificate (UC) of the 2^nd installment to claim for the final Installment.
5. The Interest on the GOI grant will be refunded/attuned with a Bank Authorization Certificate for claiming the instalment.

Officer in Charge for the Regional Office of Textile Commissioner to authenticate the progress report along with the claim for release of the final installment.

Miscellaneous Expenditure Management

A budget not exceeding 2% of the yearly cost shall be issued for the Miscellaneous purposes.

• For Administrative expenditure
• Evaluation
• Studies
• Research & Seminars
• Avoiding Information Leakage
• Advertisements and
• Employing an IT-enabled monitoring mechanism, etc.