Textile industry welcomes amended TUFS

Experts say despite being diluted, the scheme clears uncertainty and ensures some returns on investment

Crippled by cash crunch, huge debt and less export demand, the Indian textile industry has welcomed amended technology upgradation funds scheme (ATUFS) approved by the Cabinet Committee on Economic Affairs (CCEA) on Wednesday.

The ATUFS is a diluted version of Revised Restructured TUFS (RR- TUFS) which was introduced for the 12th Plan Period between 2012 and 17 under which 5 per cent of interest subsidy was granted for textile players.

Under the ATUFS, however, the government has made a fresh allocation of Rs 5,151 crore as one time capital subsidy for new investment in addition to a marginal increase on limited liability to the tune of Rs 3,381 crore for the next five years.

The government, however, claims that the ATUFS would attract an investment of over Rs 1,00,000 crore and general employment of three million during this period.

"The approval has come as a great relief to the industry especially when the exports were declining in textile and apparel sector. The focus on employment generation and export under the new TUFS by encouraging apparel and garment industry and promotion of technical textile sector, is indeed a welcome step which will help in furthering the cause of Make in India," said Shishir Jaipuria, Chairman, FICCI Textiles and Technical Textiles Committee.

Under the new scheme, the CCEA approved a total budgetary allocation of Rs 17,822 crore of which Rs 12,671 crore is for committed liability and Rs 5,151 crore for new cases under ATUFS.

In its earlier version as RR-TUFS, the government had allocated a total budgetary provision of Rs 11,952 crore for the period between 2012 and 17 for attracting an investment of Rs 1,51,000 crore. Out of this, however, Rs 9290 crore was meant for "limited liability" and Rs 2,662 crore for "new investment".

Welcoming the move, Naishadh Parikh, Chairman of Confederation of Indian Textile Industry (CITI) said, "We deeply appreciate Union Cabinet's decision approving budget for the committed liabilities for investment already made by the textile industry, which has been suspended and pending for almost nine months. CITI welcomes the launch a new scheme which could trigger the growth of textile manufacturing in India."

The textile ministry clarified that the amount allocated under "new investment" got exhausted and hence, the industry approached the ministry of finance for its enhancement.

Interestingly, of the total budgetary allocations for 12th Plan Period, an overall budgetary allocation was made to the tune of Rs 8,997 crore of which a sum of Rs 6,641.49 crore was released as of September 30, 2015.

"The launch of TUFS is a good move by the government which clears uncertainty. In the earlier version, the government made a provision of interest subsidy on capital investment which was for the entire period of loan tenure. This scheme, investors would avail one time benefit and bear the rest," said R K Dalmia, Chairman, Chairman of the Cotton Textiles Export Promotion Council (Texprocil).

The scheme, since its inception in April 1999, has propelled investment of more than Rs 2,71,480 crore till date and an amount of Rs 21,346.91 crore has been released towards subsidy under the scheme.

But another Rs 4,500 crore disbursal needed for the period in which the scheme remained discontinued.