Govt may do away with Tufs allocation for N-E

To focus on skills as the region does not have a big textile industry

The textile ministry is keen on doing away with the 10 per cent allocation for the North East under the Technology Upgradation Fund Scheme (Tufs). Government sources told Business Standard that funds under Tufs were under-utilised in the north eastern states even as textile manufacturers in other parts of India needed the assistance that the scheme provided.

“The north eastern states have a design-based industry. Therefore, efforts should be made to develop skills and design centres,” said a textile ministry official.

Under Tufs, the government provides 5 per cent interest subvention and 10 per cent capital subsidy for specified processing machinery. The scheme was introduced to encourage technology upgrade and to make Indian textiles competitive in domestic and international markets.

Out of the Rs 1,090 crore allocation for Tufs in 2008-09, about Rs 109 crore was for the north eastern sates. Most of this was not utilised.

Significantly, an additional amount of Rs 1,400 crore was given by the government as part of a stimulus package in December 2008 to clear the dues under the scheme. Hence, around Rs 249 crore meant for the north eastern states under Tufs could not be used.

Meanwhile, there is a backlog of around Rs 2,000 crore that is to be given to textile units. Significantly, the sector is going through a rough phase due to the global economic crisis, which has led to a drop in production, exports and investments.

The north eastern states also have negligible number of manufacturing units for cotton yarn and garments. Typically, these units use funds under the scheme for procuring and upgrading cotton gining, pressing and spinning machinery. According to the textile ministry, the north eastern states have about 2.54 million handloom units, which do not require a high level of assistance under Tufs.

Tamil Nadu, which has an extensive chain of cotton mills, uses around 26 per cent of the funds under Tufs. This is the highest among all states.