Textile min may agree to grant benefits to mills under TUFS

Written by Neha Pal | Neha Pal | New Delhi | Updated: Jul 14 2012, 06:56am hrs
The textile ministry is considering the industrys proposals of granting benefits under the Technology Upgradation Fund Scheme (TUFS) to mills that are seeking loan restructuring, a senior official said on Thursday.

According to Reserve Bank Of Indias guidelines, once the restructuring of loan is done then the assets are classified as substandard. Mills with such assets are currently not entitled to avail of benefits under the TUFS. An interministerial committee is set to to decide on the issue at its meeting late on Friday. Several textile firms fell into a dent trap owing to a sudden fall in product prices after two successive years of steady rise in raw material costs.

(Moreover) At present, TUFS allows interest reimbursement for a period of seven years but the textile industry is pressing for an extension to 10 years for companies which fall under the debt restructuring procedure, said the official.

RBI has approved the proposal of providing a two-year moratorium on term loans and conversion of working capital into working capital term loan.

Confederation of Indian Textile Industry (CITI) chairman SV Arumugam said, The proposals submitted by the textile ministry do not have any revenue implications since the applicable interests would continue to be paid by the industry.

The Southern India Mills Association (SIMA) chairman S Dinakaran said, Since the exports did not happen and international markets collapsed, there was a carry-over stock of 500 million kilograms. There was a decrease in demand of cotton yarn and international traders wanted it to be at lower prices.