Amended TUFS delivers huge benefits across entire textile value chain

New scheme allows cooperative banks to lend to units for tech upgrade, LLP firms can also benefit; synthetic textiles to get a leg up

In a significant boost to the dwindling textile sector, the Union Ministry of Textiles has introduced Amended Technology Upgradation Funds Scheme (ATUFS) for wider financial and operational benefits for players in the entire value chain.

Introduced first in 1999 to replace age-old technology with brand new ones for improving operational efficiency of textiles units, the TUFS was revised and upgraded time and again to incorporate new players and encourage them bring in new investments in the sector. Industry sources estimate billions of rupees of new investment post TUFS introduction.

Notified on Thursday, the ATUFS allows co-operative banks to lend to textile units for technology upgradation under this scheme. The ATUFS, which is set to benefit the synthetic textile sector immensely,  has also been extended to limited liability partnership (LLP) firms.

“The ATUFS is set to boost textile exports from India. It is a good initiative taken by the government, with expansion of a new class of financial and operational parameters. The scheme will also benefit domestic textile units,” said Ujwal Lahoti, Chairman, The Cotton Textile Export Promotion Council (Texprocil).


 

The Ministry of Textiles had launched ATUFS in place of the erstwhile Technology Upgradation Fund Scheme (TUFS) in 2016 for a period of seven years ending March 2022. The financial and operational parameters and implementation mechanism for ATUS were notified in February 2016. The government provides credit-linked subsidy under the scheme.

Interestingly, the scheme was fraught with difficulties that were brought to the notice of the government. Keeping in view the hardships faced by the industry in getting benefits under the scheme and the demands raised by various stakeholders for streamlining it, the Ministry of Textiles for the first time allowed textile units to take advantage of this scheme in addition to other benefits availed from the state governments.

“This is yet another positive step taken by the Ministry of Textiles for strengthening the industry. This will also help generate employment and boost exports and facilitate improvement in productivity, quality, etc.,” said Narain Aggarwal, Chairman, The Synthetic & Rayon Textiles Export Promotion Council (SRTEPC).

Under the new scheme, applicants who had applied for the unique identification number (UID) under revised and restructured technology upgradation fund scheme (RRTUFS) before January 12, 2016 but to whom UIDs could not be issued for non-availability of funds, will be given a one-time opportunity to apply for subsidy under ATUFS.

The revised specification of technology for the machinery for all the eligible segments would be prescribed annually in advance by the technical advisory and monitoring committee (TAMC) effective from April 1 of the year. The revised guidelines allow Textile Commissioner to constitute a Technical Committee which will assist the TAMC to prepare an indicative list of manufacturers of machinery. This Committee will meet on monthly basis to update the list of machineries and manufacturers.

Most importantly, accessories, attachments, sample machines and spares procured from other manufacturers enlisted in the indicative list will also be eligible for subsidy up to a value of 20 per cent of basic cost of machinery.

Except in the case of merger, acquisition, amalgamation or takeover of an entity, the plant and machinery bought with subsidy under TUFS shall not be disposed of before 10 years of the date of purchase without prior approval of the Textile Commissioner.

The government has been assisting textile players with timely policy support. In June last year, it had announced a Rs 60-billion package which, according to the ministry of textiles, helped attract Rs 270 billion of fresh investment till early March 2018.

Apex industry body, the Confederation of Indian Textiles Industry (CITI), reported a four per cent decline in textile and apparel exports at Rs 2,279 billion for the financial year 2017-18 from Rs 2,382 billion for the previous year. While textile exports declined marginally by one per cent to Rs 1,202 billion at the end fiscal 2018 from Rs 1,217 billion a year ago, apparel exports saw a sharp drop of 8 per cent to Rs 1,077 billion as against Rs 1,165 billion in the fiscal 2017.

Highlights of the scheme

•  Limited Liability Partnerships will also be eligible for capital subsidy
• Co-operative banks included as lending agency under the scheme
• Textile Commissioner to set up Technical Committee to prepare list of machinery manufacturers. 
• Accessories, attachments, sample machines, spares also eligible for subsidy up to 20% of basic machinery cost
• Except in merger or takeover, plant & machinery bought with subsidy under TUFS shall not be disposed of before 10 years
• Textile units permitted to avail benefits of state govt schemes in addition to ATUFS benefits.