| The Technology Upgradation Fund Scheme (TUFS) for the Indian textile industry should continue with certain modifications, says a Crisil research report.
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| According to the report, the scheme should continue for the weaving and processing segments and for the spinning sector it can be discontinued.
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| TUFS was started by the government in 1999 to uplift the declining textile industry. Later, it was extended to March 31, 2007. Various textile bodies have been seeking another extension of the scheme during the 11th Five-Year Plan. Despite assurances from the Ministry of Textiles, no actions have been taken so far.
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| The Crisil report said if the scheme (TUFS) is terminated in March, the efforts to provide financial support to the textile sector would be a half-done affair. However, the scheme needs to be modified to achieve the goals in the post-quota global supply chain for textiles.
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| The report further noted that the domestic spinning sector is mature enough while the weaving and processing sectors at their nascent stage. The spinning sector has availed maximum benefits under the scheme.
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| Quotas in the pre-2005 arrangement guaranteed access to the US and EU markets for smaller textile companies. However, with the removal of quotas, integrated textile players are now preferred in the new global sourcing paradigm.
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| Under-developed weaving and processing sector, the report said, resulted in poor quality fabrics. This forced domestic garment exporters to rely on fabric imports , the report said.
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| Meanwhile, market players said that there is a possibility of a subsidy cut. It could be down by 3 per cent from the existing 5 per cent. The ministry had hinted at certain modifications in the scheme, if it is allowed to continue in the Eleventh Plan period. |
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