Tuf scheme for textile, jute sector revived for a year

Tenure, subsidy cap to be lower; small-scale units & weaving segments get more focus.

The Union textile ministry’s Technology Upgradation Fund Scheme (Tufs), discontinued in June last year, has been relaunched in a restructured form. The scheme is meant to help modernise the textile and jute sector.

The revised scheme has several new features. Sectoral allocations and the loan period are shorter, and interest reimbursement for the spinning sector is lower.

The overall subsidy for the year has been capped at Rs 1,972 crore. The revised scheme was notified on April 28 and is to remain open till March 31 next year. It would be on till the funding is exhausted and applications are to be taken up on a first come, first serve basis.

Since its inception in 1999, nearly Rs 11,200 crore of subsidy has been released, of which Rs 8,883 crore was issued during the last three years. Tufs catalysed investments of Rs 2.08 lakh crore during its 11-year life, says the ministry.

The scheme ended in June last year and the government had appointed Crisil to study what it did. Crisil said Tufs had facilitated an increase in productivity, cost and waste reduction, and had improved quality across the value chain. However, the gains varied across segments, with the processing and powerloom sectors emerging as major areas of concern. To ensure optimum value addition across the chain, the scheme has been reintroduced, to channelise investments towards hitherto low-focus areas.

The main drawback in the new scheme, say critics, is that the maximum repayment tenure of loans has been reduced from 10 years to seven years. The two-year moratorium period remains as before, but the subsequent repayment has been shortened to five years from eight years.

“The new scheme is below expectations and the tenure of the (revised) scheme should have been longer than just a year,” said Mitesh Shah, vice president, finance, Mandhana Industries.

The weaving sector has reason to cheer, as it has been granted a 10 per cent capital subsidy for the new shuttleless loom. This has been done to eventually do away with the use of secondhand looms and should prove beneficial, said Arun Jariwala, chairman of the Federation of Indian Art Silk Weaving Industry. Earlier, only the garment and processing sector could enjoy the 10 per cent subsidy.

However, the spinning sector’s interest reimbursement has been reduced to four per cent from the earlier five per cent. Greater participation from small-scale industry units is expected, as earlier limits here have been increased.

Greater monitoring control is being introduced with pre-authorisation of all eligible claims by the textiles commissioner, Mumbai, before approval and more monitoring by the Inter-Ministerial Steering Committee, chaired by the secretary, textiles.