The Indian Textile Industry has an overwhelming presence in the economic life of the country. Apart from providing one of the basic necessities of life, the textile industry also plays a pivotal role through its contribution to industrial output, employment generation, and the export earnings of the country. Currently, it contributes about 14 percent to industrial production, 4 percent to the GDP, and 17 percent to the countrys export earnings. It provides direct employment to about 35 million people, which includes a substantial number of SC/ST, and women. The Textile sector is the second largest provider of employment after agriculture. Thus, the growth and all round development of this industry has a direct bearing on the improvement of the economy of the nation. The Indian textile industry is extremely varied, with the hand-spun and hand woven sector at one end of the spectrum, and the capital intensive, sophisticated mill sector at the other. The decentralized power loom/ hosiery and knitting sectors form the largest section of the Textile Sector. The close linkage of the Industry to agriculture and the ancient culture and traditions of the country make the Indian textile sector unique in comparison with the textile industry of other countries. This also provides the industry with the capacity to produce a variety of products suitable to the different market segments, both within and outside the country.

The major sectors forming part of the textile industry include the organized Cotton/Man-Made Fibre Textile Mill Industry, Wool and Woolen Textile Industry, Sericulture and Silk Textile Industry, Handloom Industry, Handicraft Industry, Jute and Jute Textile Industry, and Textile Exports. The Ministry of Textiles is implementing various schemes for the holistic growth and development of the sector.

The Indian Textile Industry has suffered from severe technology obsolescence and lack of economies of scale, which in turn diluted its productivity, quality and cost effectiveness, despite distinctive advantages in raw material, knowledge base, and skilled human resources. While the relatively high cost of state-of-the-art technology and structural anomalies in the industry have been major contributory factors, perhaps the single most important factor inhibiting technology upgradation has been the high cost of capital, especially for an industry that is squeezed for margins. Given the significance of this industry to the overall health of the Indian economy, its employment potential and the huge backlog of technology upgradation, it has been felt that in order to sustain and improve its competitiveness and overall long term viability, it is essential that the textile industry has access to timely and adequate capital, at internationally comparable rates of interest in order to upgrade the level of its technology.

In the light of above, the Technology Upgradation Fund Scheme was launched on 01.04.1999 for a period of five years, which has been subsequently extended till 31.03.2007, the terminal year of the Xth plan.

TUF Scheme will be continued during the eleventh plan against a provision of Rs.535 Crore in 2006-2007. Rs.911 crore would be provided under TUF Scheme in 2007-2008. As before handlooms will be covered under the TUF Scheme. The extension of TUF, a central scheme offers 5% interest subsidy to textile companies on expansion spree, has been high on the wish list of the industry. It wants more incentives for investment as it aims to double its global market to 10% by 2010. For this, investments worth Rs. 100,000 crore are required. The Union Budget 2007-08 has been positive for the textile sector.

TUF Scheme will be continued during the eleventh plan against a provision of Rs. 535 Crore in 2006-07. Rs. 911 Crore would be provided under TUF scheme in 2007-08.

As before handlooms will be covered under the TUF scheme. Allocation under this scheme for the next year has been increased which should expedite the release of the subsidy.


The Textile Ministry recently decided to extend the Technology Upgradation Fund (TUF) scheme to boost the textile industry. The industry has begged the extension of the 10% upfront capital subsidy for specified textile processing machinery by another year. The subsidy is additional to the interest subsidy of 5% under the TUF for specified textile processing machinery and the implementation period for the scheme is one year. Which will end on April 19, 2006.Under the scheme, the government has yet sanctioned 4,047 applications worth Rs 12,758 crore for expansion projects worth Rs 28,628 crore. The largest number of applications for funding has come from Gujarat (1,214).Tamilnadu got around 1,174 applications and Maharashtra 317.