In a move that aims to replicate the success of India's IT entrepreneurs, the government is planning to fund and provide workspace to start-ups in labour intensive sectors.The idea is to boost manufacturing and ensure steady supply of skilled workforce in sectors that have huge export potential. The start-ups will be funded through a dedicated equity fund on pure venture capital model. The project will be tested in the textile sector, where space will be provided to entrepreneurs at textile parks while funds will be given through the state-supported Textile Equity Fund.

"The textile ministry is working with SIDBI to launch the first state-supported, dedicated Textile Equity Fund in the next three months, which will ensure easy availability of equity for start-ups as well as expansion for smaller enterprises," says an official. 

Although apparel exports from India clocked double-digit growth in the current fiscal and production grew 45 per cent in the first five months, Indian textile exports are facing tough competition from Bangladesh in the US and EU markets. "However, this would require textile ministry to tweak their guidelines for textile parks as well as finance the development of flatted factories in textile parks where workspaces would be made readily available to entrepreneurs on rent, hire purchase as well as sale," said the official.

The textile ministry will commence work on five pilot projects for development of flatted factories in existing textile parks this year. It will shortly finalize the quantum of equity fund as well as additional financing for setting up the flatted factories.

About 40 textile parks have already been set up in the country, while another 20 were announced last year to enhance the competitiveness of the sector. Textile contributes about 14 per cent to industrial production, 4 per cent to the GDP and 17 per cent to the export earnings. The sector is the second-largest employment provider after agriculture.