The government's move to revive 29 mills of National Textile Corporation and woollen textile company British India Corporation through private participation has failed to take off.
"The government had invited bids from private players to run the 29 mills of NTC but only one bid was received while for BIC not even a single private player had shown interest," an informed source said.
The main reason that only one bid came for 29 mills of NTC was that the rent quoted by the company was high, the source added.
According to informed sources, NTC had asked a minimum of five per cent of the value of land as annual rent. Since NTC mills are located in prime locations in urban areas the value of land is high, which pushed up the rentals.
Companies would rather prefer to set up greenfield projects in areas where land in cheap than work from a high cost location.
This argument is substantiated from the fact that NTC itself is shiting one of its mills from heart of Bangalore to Hassan. By sale of land, it will get around Rs 280 crore (Rs 2.8 billion) while for setting up a new modern mill it will have to spend Rs 100 crore (Rs 1 billion) only.
Having failed in its first attempt, the government has decided to engage global consultant McKinsey to work out a new framework to evoke interest among private players for revival of 29 mills.
Under the new framework, private players could get approval for developing part of the land for commercial use and can be offered an exit clause under which the land could be handed to them under some conditions.
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