Tough without TUFS!

27 Aug '10

8 min read

Textile makers in India are finding themselves in the most awkward quandary. Bothered by another crucial issue in their industry; suspension of long appreciated and popular Textile Upgradation Fund Scheme (TUFS), these mills owner are heartily looking forward to resumption of their benefactor scheme once again.

The circular issued by the ministry of textile to all the nodal agencies and banks concerned on Wednesday, the Expenditure Finance Committee (EFC) arrived at decision on June 28, to stop issuing any further new sanctions under TUFS till the additional allocations are approved by Cabinet Committee on Economic Affairs (CCEA). Therefore, agencies paying out funds under TUFS are advised to suspend all new proposals in offing till uncertain period.

For a closer look on this issue and its impacts on its subject industry, News team at fibre2fashion interacted with players from the industry as well as associated organizations.

Bringing out significance of this scheme, D R Mehta, President – TAI, narrated pre-TUFS milieu in industry by saying- “The industry was reeling under technology setbacks, old outdated machinery with the manufacturers, not much technological advancement was prominent in the Indian textile Machinery manufacturers, etc. The quality as well as quantity of product was not up to the mark as expected by the world buyers.

This gave a clear cut setback to the industry. TUFS scheme was set in with this objective that our industry will enhance its quality and quantity of its produce and be competitive in the world market, and the scheme was welcomed by the Indian textile industry. Launch of TUF Scheme in 1999 has substantially benefited the textile industry and proved to be very successful and effective for expansion and modernization. The spinning sector in the country alone has used 34% of the total amount sanctioned. Through it, the industry brought in the latest available machinery into Indian industry. This did give them a strong foothold in the World market.”

Thereon, Mr Mehta expressed his concern over the upshots likely to befall as this scheme is dropped. He told that the industry will surely go in reverse mode as up gradation will no more be cheap. The projects that are lined up till the scheme prevailed, will take time to fructify and cause delay in being updated. Industry will take its own time to get going with these impediments.

Mr Mehta, drawing picture of industry reactions, pointed that –“Industry is upset. We feel TUF scheme is necessary to further augment spinning, processing, weaving and garmenting capacities by utilizing the advantage of surplus cotton in India.

While textile ministry sources said the scheme is being reworked and it will take two to three months to lift the suspension, the garment manufacturers are worried on the implication of the notice.”

In his opinion, since 2008, due to global recession, the exporters had shelved theirproposals to go in for modernization and capacity augmentation, and have now decided to revive expansion as the scheme would be available only till 2012. Industry had very slow pick-up in using the fund till 2003. After March 2007, when the TUFS was continued in the 11th plan, manufacturers couldn't utilize many funds due to the poor performance of the industry. Now, they have again started new projects and this scheme is very crucial for the industry. They wish recent move by the government is only a temporary measure.

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