Business Standard

Textile subsidy scheme sags in new avatar

Related News

The allocation target set by the under the (Tufs) is unlikely to be achieved because of poor demand in new project investment.

Encouraged by the robust response in the previous Tufs programme, the ministry had allocated Rs 1,972 crore as subsidy under a restructured Tufs.

Terming the response lukewarm, , textile commissioner, said, “We have received proposals for Rs 110 crore of allocation for the project worth Rs 4,200 crore.”

Under Tufs, a manufacturer setting up a new unit gets a subsidy, to promote investment in this labour-intensive industry. it was first introduced in 1999 and got a very encourage response. the total subsidy released was Rs 11,200 crore, of which Rs 8,883 crore was issued in the past three years. Tufs is estimated to have catalysed investments of Rs 2,08,000 crore during its 11-year life.

The scheme was suspended by the ministry in June last year but restored in April this year, for the current financial year. As mentioned earlier, Rs 1,972 crore has been allocated for 2011-12.

However, many expansion projects have taken a back seat this year, due to the slowing economy and uncertainities in the US and euro zone. Garment makers have stayed away as increasing their capacity does not make sense in this scenario. The US and euro zone countries are the biggest markets for Indian textile export.

Also, the government in October decided to allow duty-free import from Bangladesh for 48 textile items. So, rather than expanding the garment business in India, apparel manufacturers are moving to Bangladesh. For, the cost of production there is much less. Indian businesses are using this concession to import goods from there for use in the country’s market.

The ministry says it has planned road shows in tier-II cities to create awareness about Tufs. The main reason for the dull response, Joshi believes, was the timidity of the garment sector, owing to uncertainty in the world’s major economies.

In the new scheme is that the loan repayment has been reduced to seven years from 10 years earlier. The moratorium period remains two years and the loan repayment period has been reduced to five years from seven years.

Earlier, only the garment and processing sector enjoyed the 10 per cent subsidy. The weaving sector in the new scheme has been granted 10 per cent capital subsidy for new shuttle-less looms, to get rid of second-hand ones. However, the spinning sector’s interest reimbursement has been reduced to four per cent from the earlier five per cent.

After the scheme ended in June last year, the government had appointed Crisil to study what it had achieved. Crisil said Tufs had facilitated an increase in productivity, cost and waste reduction, and improved quality across the value chain. However, the gains varied across segments, with the processing and powerloom sectors emerging as major areas of concern. To ensure optimum value addition across the chain, the scheme was reintroduced, to channelise investments towards hitherto low-focus areas.

Read more on:   
|
|

Read More

Cotton yarn exports to touch record high in FY13

This financial year, cotton yarn exports are expected to touch an all-time high, owing to good demand from China. Textile Commissioner A B Joshi said ...

Quick Links

 

Market News

India's dependence on imported edible oil to hit new record

Import bill to rise 5%, over 65% of 19.4 million tonnes supplies to be met through imports, robust directconsumption of seed to lower ...

Jaggery prices shoot up, in line with those of sugar

Farmers have shifted a large amount of high-quality cane (about 10%) to jaggery units so that these fetch 5-10% premium over the standard price ...

Cotton exports hit as China shifts policy

Raw cotton export may fall 20% in the next crop year as against 6% this year; rise in finished yarn exports adds to woes

Sugar exports: Industry restive over delays in subsidy revision

For February-March, the rate decided was Rs 3,300 a tonne; that for April-May was to be announced in the last week of March

Sugar output down 4%, says Isma

Indian mills had produced 1.54 mt raw sugar by the end of March and of that 850,000 tonnes was exported

Back to Top