NEW DELHI: Government will soon set up a Rs 100 crore venture capital fund to provide equity support to start-ups in the textile sector, hoping to encourage innovative ideas in this export intensive sector.
Proposed by the National Manufacturing Competitiveness Council and supported by textile ministry, the Textile Equity Fund would be jointly set up with the SIDBI Venture Capital and is expected to be in place by November this year.
According to a senior official in Planning Commission, Centre will put in Rs 35 crore while SIDBI VC will pump in Rs 15 crore to lend to entrepreneurs in the pilot phase.
"This would be scaled up to Rs 100 crore during the remaining period of the 12th Plan , depending on the response," the official told ET on the condition of anonymity. While the corpus of the fund has been finalised, the Planning Commission is adamant to fund start-ups in the powerloom sector only while textile ministry as well as SIDBI is in favour of making all sub-sectors eligible for such equity funding.
Confirming the development, a senior SIDBI official said that they want the fund to support all sub-sectors including powerloom, weaving, spinning, etc. "This would ensure that larger number of start-ups could avail equity support in the pilot phase.
However, if we restrict it only to powerlooms, there could be a possibility of the proposal not taking off to the desired extent. This will impact the future funding of such start-ups," the SIDBI official added. Textile sector contributes about 14% to industrial production, 4% to theGDP and 17% to the country's export earnings.
The sector is the second largest employment provider after agriculture.