New money spin for shuttleless looms

Written by Banikinkar Pattanayak | New Delhi | Updated: Jan 22 2013, 07:20am hrs
Govt plans higher capital subsidy

The government is considering a higher capital subsidy for shuttleless looms under the Textile Upgradation Fund Scheme (TUFS) for the rest of the current Plan period, through 2017, to boost the labour-intensive weaving segment.

The textile ministry has proposed to raise the capital subsidy to 15% from the current 10%, a senior government official told FE. An empowered finance committee is studying the proposal, and once cleared by it, a Cabinet nod is expected to be sought by end-February.

The renewed focus on the weaving sector may augur well for the Centre ahead of the 2014 general elections.

If implemented, shuttleless looms will be entitled to 15% of capital subsidy or the financing of 30% margin money to get bank loans, and a 5% interest reimbursement.

Moreover, a 5% interest reimbursement or the 30% margin money scheme would be granted to second-hand looms until they turn 10 years each. Benefits and concessions under the TUFS would continue mostly unchanged in other key segments, including spinning, processing, garments, technical textiles and silk, said the official. Under TUFS, the Centre has allocated R11,577 crore for the 12th Plan period (2012-17) to meet the subsidy burden.

The Centre mainly provides interest subsidy against loans to units, apart from capital subsidy as well as limited cushion against exchange rate fluctuation, for investing in new technology.

The TUFS has leveraged investments of R2,43,427 crore during the 10th and 11th Plan periods in the sector, said the official.