The Hindu Business Line : Allow TUFS till March 2007, say spinning mills

The Tamil Nadu Spinning Mills Association (TASMA) has regretted the decision by the Ministry of Textiles to halt sanctioning of fresh loans under the technology upgradation fund scheme (TUFS) for textile units.

It said the move has come at a time when many in the industry are expanding production capacity by placing orders for new plant and machinery, thinking that the TUFS will remain in force till the allotted deadline of end-March 2007. It is in this backdrop the July 6 circular from the office of the Textile Commissioner ordering banks to stop processing of new TUFS loans has come as a shock to the industry, the TASMA has said in a statement.

TASMA, in a communication addressed to the Union Finance Minister, Mr P. Chidambaram, haspointed out that with the opening of the global textile trade and the removal of the quota system the domestic textile industry had to modernise units or expand production capacities. A majority of these modernisation projects already planned and being implemented were done by keeping the interest subsidy allowed under the TUFS in mind. Hence, the projects that are likely to commence shortly would face serious repercussions if TUFS interest subsidy is not provided.

Re-look sought

Mills have already paid heavy advances to manufacturers of machinery and also bought lands to start construction. A few of them have applied for bank loans. Hence, if they are not provided with TUFS subsidy, the entire project would fail for want of financial stability and a level playing ground with the mills that have already benefited from low investment cost under TUFS, the TASMA representation said. It urged the Finance Minister to have a re-look at this issue