The Cabinet Committee on Economic Affairs (CCEA)'s recent move of considering a proposal to raise the fund allocation for up gradation of the textile sector under the XI five-year plan (2007-12) to Rs 150 billion has met severe criticism.
Previously, the government had allocated Rs 80 billion for modernization of the industry, but as the sum was used up by June 2010, the government directed the banks not to approve any fresh sanctions under the Technology Upgradation Fund Scheme (TUFS), till the Cabinet Committee on Economic Affairs (CCEA) approves further allocation of funds.
The additional sums that may be allocated for the TUFS would be disbursed to the commitments worth Rs 54.32 billion that were already made in the past, while Rs 19.72 billion would be utilized to fund the new ventures coming up during the remaining term of the XI plan.
The Textile Ministry however specified that, the sanction of additional funds for new ventures under the TUFS won't be unrestricted and would be subjected to an upper ceiling of Rs 19.72 billion.
Since initiation of the TUFS in 1999, banks and financial institutions have funded loans worth Rs 731.68 billion. The government, with an intention to support up gradation of the textile firms in the country, subsidizes five percent of the interests on the loans disbursed under the scheme.
According to the Ministry, spinning, weaving, cotton ginning, pressing and garment are some of the sectors which have gained the most from the scheme.
Fibre2fashion News Desk - India
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