The textiles ministry has sought Rs 11,000 crore under the Technology Upgradation Fund Scheme (TUFS) for the 11th Plan period ending 2012.
“We have prepared a proposal, which will be placed before an Expenditure Finance Commission (EFC) meeting on July 31,” minister for textiles Shankarsinh Vaghela said. The revised TUFS will be announced in August.
The hike in the TUFS allocation has been sought as the finance ministry had extended a Rs 976-crore package in the Budget for 2007-08, compared with Rs 4,000 crore for the entire 10th Plan. The textile sector termed the amount much below expectations, as it is readying for massive modernisation and expansion.
The issue has already been discussed at a meeting of the National Manufacturing Competitive Council (NMCC) on June 18. If okayed, it will go to the Cabinet Committee of Economic Affairs (CCEA).
The higher allocation under TUFS will provide the much-needed respite to the industry, which is hit by appreciating rupee and increasing interest rates.
Under TUFS, which was introduced in April 1999, an interest subsidy of 5% is given to manufacturers. Subsequently, the scheme also provides an upfront capital subsidy of 20% for decentralised weaving units as an alternative to the 5% interest compensation for specified processing machines and a 10% capital subsidy.
These initiatives had helped the textile sector to some extent.
During 1999-2000,projects worth Rs 5,074 crore were sanctioned. By March 2006, projects worth Rs 37,881 crore were cleared.
“To address other issues in cohesive manner, four working groups covering textile inputs – physical framework, human resource development, policy framework and role of government and market development have been constituted. The working groups will consist of leading members of trade and industry, economists, academicians, experts and financial analysts who will examine various issues arising in these areas”, Vaghela said.
The recent steps taken to address the impact of the rising rupee on exports like revision of the duty drawback and DEPB rates for exporters would provide some relief to them. The government was open to consider further steps to mitigate the impact of the rising rupee on exports. With these measures the minister was confident that exporters would be able to realise the targets of US $ 25.2 billion set for this sector for the year 2007-08. However,the government is likely to withdraw the benefit of TUFS to units that install old machinery for modernisation. TUFS was set to expire in March but after hectic lobbying by the textile ministry and industry associations, it was extended for the 11th Plan period.
