The Southern India Mills' Association (SIMA) has abandoned plans to set up a textile park at Naidupet in the Nellore district of Andhra Pradesh, blaming the rising rupee and interest rates, and increasing raw material costs.

According to local media, 12 SIMA members had paid in full for 375 acres of the 1,000 acres allocated for the park, which would have provided jobs for 20,000 people.

But Dr K Selvaraju, secretary-general of SIMA, told Business Line that the project has been thrown into turmoil after: "The rupee has appreciated steeply. Interest rates have gone up 4-5%. The cost of raw material [cotton] increased by 10-15% and the yarn price saw a decrease of 4-5%."

SIMA says it intends to review the feasibility of the project in a year's time.