The Hindu Business Line : `Keep tech update scheme going'

Spinning effect
The textile industry would need an investment of up to Rs 1.40 lakh crore till 2010.
China has increased the spinning capacity from 30 million spindles to 80 million spindles in the last decade

Coimbatore , July 10

The Southern India Mills Association (SIMA) has appealed to the Centre to keep the Technology Upgradation Fund Scheme (TUFS) for the textile industry going till the industry is able to tide over problems such as high cost of power, high transaction cost, poor infrastructure facilities and high interest rates and the Textile Ministry's targets are achieved.

It expressed fear that India would not be able to compete with countries such as China and Pakistan if it fails to make the targeted investment in the textile sector.

Mr S.V. Arumugam, Chairman, SIMA, Coimbatore, in a statement issued here, said the Ministry of Textiles had asked the banks not to sanction any fresh loan under TUFS from July 6 and banks might disburse the loans already sanctioned till they fully exhaust the subsidy amount available with them.

He said the Ministry's circular advised the banks to process fresh loans but not sanction them under TUFS till the receipt of additional funds.

He sought allocation of funds for interest reimbursement till March 2007 in addition to sanction of funds for clearing the subsidy backlog due even for 2005. While the Textile Ministry had put the fund requirement at Rs 1,515 crore for 2006-07, the budget allocation was only Rs 535 crore.

He said according to the Confederation of Indian Textile Industry (CITI), the India's Vision Statement released two years ago, the textile industry would need an investment of up to Rs 1.40 lakh crore till 2010. While China had increased the spinning capacity from 30 million spindles to 80 million spindles in the last decade, the capacity addition in India was less than one million spindles during the same period.

While lauding the decisions of the Government to promote 25 integrated textile parks (ITPs) across the country by extending a grant of Rs 189 crore and to provide 10 per cent additional capital subsidy under TUFS for select processing machinery, Mr Arumugam feared that ITPs would not take off in the absence of TUFS.

The recent upturn in interest rates would erode the profitability of the textile mills in the absence of TUFS since they have to work on low margins. He requested the Government to keep the TUFS going since the move to suspend sanctioning of fresh loans under TUFS would "totally paralyse the investment plans and discourage new investments" in the textile sector which is the second largest employment provider in the country.