Ministry for rise in credit flow under Tufs

The ministry of textiles is considering increasing the credit flow to the power loom and processing sectors under the Technology Upgradation Fund Scheme (Tufs). It has already recommended the scheme be included in the 12th five-year Plan (2012-17).

Earlier, 10 per cent subsidy was provided to the garment and processing sectors. Under the restructured Tufs, the weaving sector was also granted 10 per cent capital subsidy for new shuttle-less looms. How-ever, the spinning sector's interest reimbursement was reduced from five per cent to four per cent.

“Without making major fundamental changes in the scheme, we are trying to increase the credit flow to the power loom and processing sectors. These sectors would get a little more attention than other sectors,” said A B Joshi, textile commissioner.

HELP AT HAND

• 10% Capital subsidy to the weaving sector, under the restructured scheme 
• Rs 25,033 cr The investment under Tufs till March 
• 4% Interest reimbursement to the sector, compared with 5% earlier 
• Rs 256 cr Subsidy disbursement till March

Small units in the power loom and processing sectors are vital, as these contribute significantly to the growth of the domestic textile sector. Also, there is intense competition among these units.

On the textile ministry’s proposal to include Tufs in the 12th Plan, the Planning Commission has asked the ministry to evaluate the restructuring of the scheme, and the ministry has floated tenders for this. The deadline for proposals to review the revised scheme is October 16.

After the scheme ended in June 2010, the government had appointed CRISIL to review the scheme’s achievements. According to CRISIL, Tufs had facilitated an increase in productivity, cut costs and improved quality across the value chain. However, the gains varied across segments, with the processing and power loom sectors emerging as areas of concern. To ensure value addition across the chain and channelise investments towards other areas, the scheme was reintroduced.

According to an inter-ministerial steering committee, at Rs 25,033 crore, investment under Tufs till March was 47 per cent lower than the Rs 46,900-crore target. Subsidy disbursement were Rs 256 crore, compared with the target of Rs 1,972 crore. While about 66 per cent of the scrutinised applications were rejected, the rate of condoning was about 19 per cent.