India Government to re-introduce technology upgradation fund for textiles

The Union government is to re-introduce the Technology Upgradation Fund Scheme (Tufs), perhaps for at least 10 years, in the new textile policy, scheduled to be out by month-end.

In the revised policy, the onus of funding the sector is likely to be put on the states where factories exist. “We have increased states’ share in central taxes to 42 per cent from 32 per cent earlier. So, we are looking to introduce Tufs with some tweaks; states might be asked to fund it. We are looking for a long-term policy, for at least 10-15 years. However, a final decision is yet to be taken,” said Sanjay Kumar Panda, secretary, ministry of textiles, here on Thursday.

Tufs, implemented from April 1999, was introduced to catalyse investments in the textile and jute industry, with a five per cent interest reimbursement. The scheme was initially approved from April 1999 to March 2004, extended to 2007 with modifications and further restructured with effect from April 2011, to March 2012.

In 2012, then commerce minister Anand Sharma announced its continuation for the 12th Plan period of 2012-17, with an outlay of Rs 11,900 crore. Of this, Rs 6,000 crore has been released so far.

“We will ask for the remaining Rs 6,000 crore for the rest of the Plan period. Depending upon the money available, the ministry will take a final decision on allocation in the various sectors,” Panda added.

The industry utilised Rs 12,383 crore against the budgetary allocation of Rs 13,785 crore during the 11th Plan. Restructured Tufs allocations did not prescribe sectoral ceilings for the spinning, powerloom and handloom sectors. Investments in spinning were Rs 34,347 crore and in the weaving sector, including powerlooms and handlooms, Rs 9,750 crore.

“Looking at the scheme’s success in the past, we are pushing for Tufs very aggressively. Its nature and allocation is yet to be decided, though,” said Kiran Soni Gupta, textile commissioner.

The government started with a capital subsidy when it was introduced in 1999. Later, the mode of relief was changed to interest subvention.