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Cover Story | February 2016

TUFS Windfall! To catalyse $15 billion investment

The Amended Technology Upgradation Fund Scheme (A-TUFS), which has come as a breather to the crisis-ridden textile industry, is expected to spur investment to the tune of $15 billion. An ITJ Report.

After a long roller-coaster ride in 2015, the Indian textile industry seems to be in for good times! Dispelling all the fears of uncertainty over the Technology Upgradation Fund Scheme (TUFS), the Indian Government, in a surprise move, has amended the TUFS with a larger subsidy rate of 15 per cent to ease the woes of the textile industry.

The Government’s decision to introduce an amended technology upgradation fund scheme (A-TUFS) in place of the existing revised, restructured TUFS has brought immense relief to the textile industry. The scheme is likely to ease the financial burden of textile units and enable higher investments in the sector, industry officials said.

Having been laid low by cash crunch, huge debt and less export demand in the last many months, the Indian textile industry has welcomed A-TUFS approved by the Cabinet Committee on Economic Affairs (CCEA). The A-TUFS is a diluted version of Revised Restructured TUFS (RR-TUFS) which was introduced for the 12th Plan Period between 2012-17 under which 5 per cent of interest subsidy was granted for textile players. The Government has brought A-TUFS in place of RR-TUFS for technology upgradation of textiles industry, a move expected to boost job creation and exports in the sector.

The scheme would generate investments to the tune of over $15 billion and create over 3 million jobs, the Government said after the cabinet approved A-TUFS.

The spinning sector, however, is not likely to be included in the scheme as it already has excess capacity.

Under the new scheme, there will be two broad categories—apparel, garment and technical textiles—where 15 per cent subsidy would be provided on capital investment, subject to a ceiling of $4.5 million for entrepreneurs over a period of five years’ and sub-sectors. The remaining sub-sectors would be eligible for 10 per cent subsidy, subject to a ceiling of $3 million on similar lines. A budgetary provision of $2,700 million has been approved, of which $1,900 million is for committed liabilities under the ongoing scheme, and $777 million is for new cases under A-TUFS. The scheme will come into effect from the date of notification.

The Government is making efforts to resolve the issue of settlement of committed liabilities of around Rs 3,000 crore arising out of ‘blackout and leftout’ period cases under TUF scheme for textile industry, Textile Minister Santosh Gangwar said. 

The Clothing Manufacturers Association of India (CMAI) has welcomed A-TUFS that has been cleared by the CCEA. Rahul Mehta, President, CMAI, stated that the launching of new scheme in place of RR-TUFS is a relief to the entire textile sector, especially because RR-TUFS was in a limbo and no unique ID, which is the formal sanction under the scheme, has been issued after September 2014. Allocating nearly Rs 13,000 crore for clearing the committed liabilities will help in clearing the backlog pending for issuance of UIDs and also the large number of so called left-out cases that have been pending for a decision for nearly four years. Allocation of over Rs 5,000 crore for new projects will encourage fresh investments, both for modernising as well as scaling up existing production facilities and for greenfield investments.

Mehta thanked the Government for the extra focus provided to the highly labour-intensive apparel segment and highly-potential technical textiles by stipulating a higher capital assistance of 15 per cent for them as against 10 per cent available to other segments. He pointed out that apparel industry was not very capital intensive, but given the sub-scale operation of production facilities in this<

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