Indian govt approves continuation of TUFS in 12th Plan

30 Aug '13

3 min read

The Cabinet Committee on Economic Affairs (CCEA), Government of India, has given its approval for continuing the Technology Upgradation Fund Scheme (TUFS) during the 12th Five Year Plan period (2012-17) with a major focus on powerlooms in accordance with the Budget announcement for the financial year 2013-14.

The total budget outlay for continuation of the scheme during the 12th Plan period will be about Rs.119 billion, out of which Rs. 24 billion have been allocated for the financial year 2013-14.

First launched in 1999, TUFS is one of the flagship schemes of the Ministry of Textiles and has been instrumental in helping India achieve new heights in the development of the textile sector, particularly in the spinning segment.

The continuation of the scheme during the 12th Plan is expected to generate 11.5 percent annual growth in volume terms in fabric production and 15 percent in value exports by increasing domestic value addition and technological depth and by enhancing the global competitiveness of textiles products to generate an additional employment to 15.81 million workers.

Under TUFS, Interest Reimbursement (IR) on second hand imported shuttleless looms shall be reduced from 5 percent to 2 percent, in order to promote indigenous manufacturing of the textile machinery.

On the other hand, for new shuttleless looms capital subsidy would be raised from 10 percent to 15 percent, IR from 5 percent to 6 percent, Capital Subsidy from 10 percent to 15 percent and margin money subsidy from 20 percent to 30 percent with an increase in subsidy cap from Rs. 10 million to Rs. 15 million.

Capital subsidy for handloom and silk sectors would be increased from 25 percent to 30 percent. In addition to this, margin money subsidy cap would be increased from Rs.4.5 million to Rs. 7.5 million in respect of micro, small and medium enterprises (MSMEs) and jute sectors.

Sectoral cap of 26 percent will be applicable only for the spinning segment and sectoral caps for all other segments have been removed to enable balanced growth across the value chain.

Further, a pilot project for hire-purchase of new shuttleless looms shall be introduced with a plan outlay of Rs.3 billion within TUFS to enable poor powerloom weavers, having limited capacity to make capital investments, to upgrade their looms through payment of easy installments.

The Textiles Ministry hopes that TUFS will help induce capital investment in the textile sector to achieve growth in the fibre, yarn, fabric and garment production chain.

Welcoming the implementation of TUFS during the 12th Plan period, the Confederation of Indian Textile Industry (CITI) chairman SV Arumugam said the announcement will invigorate the entire textile sector.

He observed that the textile sector has just come out of a difficult period and is on the threshold of the growth, and the announcement of continuation of TUFS would encourage the much needed investments in all the segments of the industry both for modernization and expansion.

Fibre2fashion News Desk - India

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