TUFS proves to be proverbial lifeline for textile sector

29 Dec '09

4 min read

Technology Up-gradation Fund Scheme (TUFS) initiated by the Union Ministry for Textiles is one of the highly successful schemes implemented by the Government of India. Indian textile industry was reeling under the impact of out-dated technology apart from other traditionally identified drawbacks with little or no value-addition to speak of. However, introduction of this scheme has proved to be a proverbial lifeline for the textile and allied industries. Fibre2fashion has taken the initiative to bring to our esteemed readers, the various statistical data related to TUFS with due thanks to the 'Office of the Textile Commissioner', Mumbai for providing the data.

The Ministry of Textiles first launched the Technology Up-gradation Fund Scheme (TUFS) initially for a period of five years, for the textile and jute sector in April-1999. At the end of the five year period in March-2009, it was subsequently extended up to March 2007. The objective of the TUF scheme was to help the ailing textile and allied sectors to modernise and up-grade their technology and equipment in which the government also paid a subsidy to these enterprises, to help them with their capital requirements.

Under the scheme, the companies have the option to choose from multiple options like 5 percent interest reimbursement of the normal interest charged by the lending agency on RTL or, 5 percent exchange fluctuation (interest & repayment) from the base rate on FCL, or 15 percent credit linked capital subsidy for SSI sector, or 20 percent credit linked capital subsidy for powerloom sector, or 5 percent interest reimbursement plus 10% capital subsidy for specified processing machinery.

Segments which were identified within the textile and allied industry, included, spinning, cotton ginning & pressing, silk reeling & twisting, wool scouring & combing, synthetic filament yarn texturising, crimping and twisting, manufacturing of viscose filament yarn (VFY) / viscose staple fibre (VSF), weaving/knitting including non-wovens and technical textiles, garments, made-up manufacturing, processing of fibres, yarns, fabrics, garments and made-ups.

The jute sector is also eligible to take advantage of these concessional loans for their technology up-gradation requirements. Investments in common infrastructure or facilities by an industry association, trust or co-operative society and other investments specified are also eligible for funding under the scheme. Improved metal frame handlooms used by the handloom weavers have also been covered under the scheme.

Initially, development banks like IDBI, SIDBI and IFCI were selected as the nodal agencies for determining eligibility and disbursal of the subsidies to the textile and jute sector. From October-2005, in addition other nationalized, private and regional banks were also appointed as nodal agencies to take the total of nodal agencies to 122. There is no cap on funding under the scheme and the technology levels have been benchmarked in terms of specified machinery.

An Inter-Ministerial Steering Committee (IMSC) under the chairmanship of the Secretary (Textiles) has been constituted for monitoring and review of the scheme and a Technical Advisory cum Monitoring Committee (TAMC) under the Chairmanship of the Textile Commissioner has also been constituted to interpret, or clarify and technical issues raised by any of the nodal agencies regarding the eligibility of any unit or machinery under the scheme.

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