The textiles ministry has decided to reintroduce the Technology Upgradation Fund (TUF) scheme in the next two to three months. TUF is a financial incentive scheme for the sector extended through banks in which the government subsidises a portion of interest on loans, exchange rate fluctuations and capital equipment on a case-to-case basis.
For small and medium enterprises of capital investment up to Rs 2 crore, the proposed special incentive package entails capital subsidy instead of 10 per cent capital subsidy and five per cent interest rate subsidy.
A salient feature of the new TUF will be the inclusion of a new segment — synthetic and technical textiles. However, officials cautioned that this would be only operational provided the proposal entailed in the national fibre policy is approved by the Cabinet.
Once this feature gets Cabinet nod, TUF will be extended to both domestic and foreign companies if it is made applicable for the synthetic and technical textiles. Officials explained that the companies engaged in producing downstream petrochemical products, used as raw materials for synthetic and technical textiles, would also be allowed in this scheme.
Besides TUF, another major incentive for the man-made fibre industry under consideration is to allocate exclusive gas blocks to synthetic textile companies like power companies under the new gas allocation policy.
“Since these companies are basically downstream petrochemcial units, they could use either gas or naphtha. Therefore, the new units if given or allocated exclusive rights on gas, will be a major boost for the companies, said the officials.