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G. Gurumurthy

Coimbatore , Jan. 15

EVEN as the proposed higher differential interest of eight per cent allowed under the technology upgradation fund scheme (TUFS) for modernising textile processing sector is cleared by the Centre, the garment industry is asking the Government to do away with the time limit of six months for project completion to avail themselves of the higher quantum of interest subsidy.

The Government has now permitted a higher interest subsidy of 8 per cent under TUFS for processing sector modernisation against the general 5 per cent interest subsidy.

But the condition that such modernisation projects of processing industries should be carried out within six months should be removed because it would be impossible to complete any major project within six months, said Mr A. Sakthivel, Chairman and Managing Director of the Nethaji Apparel Park, the newly set up knitwear garment park company.

Mr Sakthivel, who made a specific request in this regard with the Union Textile Minister, Mr Shanker Sinh Vaghela, during the latter's visit to Tirupur, had suggested that to provide the extended time limit, the subsidy could be allowed to co-terminate with the operation of the very TUFS itself, which has been now extended till March 2007.

Another request from the garment industries is the issue of allowing higher rate of depreciation made available to TUFS projects. Right now, the textile entrepreneurs availing themselves of financial assistance for modernisation under TUFS get higher depreciation benefit from the income-tax department.

As against the usual 25 per cent depreciation on plant and machinery permitted to the general pool of industries, the projects financed under the TUFS are given higher depreciation at 50 per cent but these benefit is permitted only for those projects coming up in weaving, processing or garmenting.

However, the promoters of modernisation projects complain that while the operation of TUFS had been extended till 2007, the provision of the higher depreciation rate has not been given any parallel extension to co-terminate with the TUFS in 2007, thereby causing problem in getting the benefit of the higher depreciation.

Mr Sakthivel wanted the Finance Minsitry to consider this and accordingly allow for parallel extension.

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