The government has catalysed investements worth R1,11,000 crore in the textile sector in the three years through 2011-12 by offering a subsidy of R9,000 crore under the Technology Upgradation Fund Scheme (TUFS), a senior government official said on Tuesday.
The government expects to attract investments worth R1,51,000 crore through the scheme in the current Plan period, the official said. The Budget 2013-14 announced the continuation of the TUFS during the 12th Plan period through 2017 with a subsidy allocation of R11,952 crore.
Despite a cash crunch in the overall industry, the country?s spinning capacity rose by 6.11 million spindles to 48.15 million spindles in the three years through 2011-12, partly due to the help provided under the scheme, he added. Consequently, the employment in the spinning sector also increased to 9,44,000 in 2011-12 from 8,92,000 three year ago, said the official.
However, the government has been planning to tweak TUFS to shift focus from the spinning segment to the more labour-intensive processing, weaving and garments sectors, aimed at boosting inclusive growth.
Under the proposed structure, the allocation to the spinning sector through TUFS would be capped at 30% and for others, the sectoral caps are not required. This is because investments in sectors other than spinning have been meagre. The capital-intensive spinning sector traditionally accounts for around half the total committed investments under TUFS and grabs 50% of the government?s subsidy allocation.
The proposal to shift focus to the weaving, processing and garments sector comes amid mounting concerns about the ability of these labour-intensive sectors, which mainly comprise small and medium-sized units, to compete on a global level, especially against top player China, due to the lack of a massive scale. Moreover, since these sectors employ millions, they are a crucial driver of inclusive growth and hence needs support.
