The government will soon initiate action to restructure corporate debt in textile industry involving Rs 18,000 crore (Rs 180 billion) in ailing units.

"A base paper will be ready by next week, paving the way for starting debt restructuring and swap within a month along the lines of the steel industry," textiles ministry sources told PTI.

The "base paper" is being prepared by taking inputs from the industry, financial institutions, business chambers, and other stakeholders. Global consultants including Deloitte & Touche and Ernst & Young also gave their inputs.

On the basis of this paper a "proposal" would be drafted, which would then be sent to the finance ministry, which would work on drawing up a scheme for debt restructuring of textile units, sources said.

Textile ministry is closely working with the finance ministry to give incentive to the debt restructuring scheme, which is expected to bring down the non-performing assets in the sector to half.

Sources said package would also be available for profit making units, which were under huge debt burden or were paying very high interest rates and wanting to switch on to low interest debt as the government was of the view that efficiency should not be penalised.

Textile ministry's initiative with regard to reviving the ailing units in the sector follows Finance Minister Jaswant Singh's announcements in the Budget.

While in the steel sector, the initiative for restructuring was taken up by financial institutions and industry, in the textile industry it has been taken up by the government as the size of units, which are scattered all over the country is quite small.

Sources said the incentives announced in the budget had corrected the anomalies, which had existed for long and would help the industry in meeting the challenges of the post quota-regime.