The Hindu Business Line : ‘Recast tech fund scheme will trigger investments’

The modified TUFS with a mandate to continue the scheme for the entire 11th Plan period (2007-12) has now offered extension of 10 per cent capital subsidy in addition to the 5 per cent interest reimbursement to machinery investments made by technical textiles and garment sectors, as was made available earlier to the textile processors under the previous TUFS dispensation. The same concession for the textile processing sector will continue under the modified TUFS too.

Among the new features are reduced interest subsidy (from five per cent to four per cent) for the spinning sector, 20 per cent margin money subsidy in place of 5 per cent interest reimbursement for powerloom, SSI textile and jute sectors for TUFS compatible machinery purchases with a raised capital ceiling at Rs 2 crore instead of Rs 1 crore. The beneficiaries have to ensure 15 per cent equity contribution.

The powerloom sector continued to enjoy the provision to buy second-hand machinery (shuttleless looms) under TUFS.

All the sectors other than spinning, retain the 5 per cent interest reimbursement element under the revamped scheme.

Significant change

Another significant change effected in the TUFS is investment, such as land, factory building, preoperative expenses and margin money for working capital, which were earlier allowed for TUFS benefits, will become ineligible for interest reimbursement except in the case of apparel sector which will be assisted with 50 per cent cap.

As for the powerloom and handloom sectors, 25 per cent capital subsidy on purchase of new machinery and equipment for the pre-loom and post-loom operations, handlooms/up-gradation of handlooms, testing and quality control equipment.

Welcoming the announcement on the modified TUFS, the apex textile body Southern India Mills Association (SIMA) today said the new scheme would trigger substantial investments, enabling the investors move back and forth to strengthen the weaker-links within the textile value chain and migrate to new areas like technical textiles or garment-making which stand to get 10 per cent upfront capital subsidy.

Despite the current hiccups like fall in value realisation due to rupee appreciation and hike in interest costs, the changes in TUFS will pave way for achieving targeted investment of Rs 1.94 lakh crore envisaged by 2012.

Even as SIMA thanked the Tamil Nadu Chief Minister’s efforts in pursuing the Centre to extend the TUFS for 11th plan period.

More Stories on : Modernisation | Textiles | Industry Associations | Tamil Nadu

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