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Capital Subsidy under Jute Technology Mission
29 Jan '10
2 min read
The Cabinet Committee on Economic Affairs approved a proposal of the Ministry of Textiles to raise the cap on the subsidy prescribed in the scheme component Acquisition of Plant & Machinery (Capital Subsidy) under Jute Technology Mission.
The cap on subsidy under the scheme has now been enhanced to Rs.3.5 crore per mill in respect of existing mills in general states and to Rs.4 crore per mill in respect of new mills and existing mills in the North East. This is expected to provide the much needed thrust and incentive to the jute industry to invest in modernisation on a significant scale.
The Jute Technology Mission was launched by the Government for the holistic development of the jute sector and is being implemented during the XI Five Year Plan.
Under this scheme there is an outlay of Rs.80 crore which is to be provided as capital subsidy @20% of the cost of identified machinery and plant. This component aims at enhancement of productivity in the jute industry by technological upgradation of existing machinery to suit modern production practices. Under this scheme the ceiling on subsidy was Rs. 75 lakh per unit for existing units which could be enhanced to Rs. one crore for new mills and for units in North East.
This cap on the subsidy resulted in poor off-take under the scheme thereby defeating the very purpose of the scheme which was modernization and technological upgradation of jute industry. The jute industry also had been claiming that the cap on subsidy of Rs. 75 lakh/ one crore per unit is not sufficient to bridge the viability gap for making the investment.
Based on a techno-financial viability study it was worked out that subsidy cap of Rs.3.5 crore would mean 100% viability gap funding for mills having capacity of 70 TPD or lower. The mills with larger capacity would be able to carry out partial modernization or alternatively avail benefits under TUFS, the flagship scheme of Ministry of Textiles, under which there is no cap on subsidy that can be availed.
The cap on subsidy under the scheme has now been enhanced to Rs.3.5 crore per mill in respect of existing mills in general states and to Rs.4 crore per mill in respect of new mills and existing mills in the North East. This is expected to provide the much needed thrust and incentive to the jute industry to invest in modernisation on a significant scale.
The Jute Technology Mission was launched by the Government for the holistic development of the jute sector and is being implemented during the XI Five Year Plan.
Under this scheme there is an outlay of Rs.80 crore which is to be provided as capital subsidy @20% of the cost of identified machinery and plant. This component aims at enhancement of productivity in the jute industry by technological upgradation of existing machinery to suit modern production practices. Under this scheme the ceiling on subsidy was Rs. 75 lakh per unit for existing units which could be enhanced to Rs. one crore for new mills and for units in North East.
This cap on the subsidy resulted in poor off-take under the scheme thereby defeating the very purpose of the scheme which was modernization and technological upgradation of jute industry. The jute industry also had been claiming that the cap on subsidy of Rs. 75 lakh/ one crore per unit is not sufficient to bridge the viability gap for making the investment.
Based on a techno-financial viability study it was worked out that subsidy cap of Rs.3.5 crore would mean 100% viability gap funding for mills having capacity of 70 TPD or lower. The mills with larger capacity would be able to carry out partial modernization or alternatively avail benefits under TUFS, the flagship scheme of Ministry of Textiles, under which there is no cap on subsidy that can be availed.
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