The Hindu Business Line : Textile industry wants TUFS to co-terminate with 11th Plan

The textile industry, taking comfort at the Union Finance Minister's assurance on the Government's intentions to continue the technology upgradation fund scheme (TUFS), has said the scheme should co-terminate with the Eleventh Plan, if the on-going capital investments, being made by the textile sector for modernisation, were to proceed unhindered.

To achieve this, the industry is making an effort to evolve another vision plan which may form the basis for the Planning Commission to consider extending the operation of the TUFS till 2012, Mr S.V. Arumugam, Chairman of the Southern India Mills Association (SIMA), has said.

Overall estimation

SIMA, along with its all-India apex textile body — the Confederation of Indian Textile Industry (CITI) — is currently attempting to bring out an estimation of the overall size of the allocation of TUFS that may be needed to meet the requirements. One of the reasons cited for the `surprise' stoppage of the processing of the TUFS loans is non-furnishing of the estimation to the Finance Ministry on the likely fund absorption by the textile units on modernisation projects under TUFS route, Mr Arumugam pointed out.

The Ministry of Textiles (MoT), through the office of the Textile Commissioner (TC), had issued a circular to the banks on July 6 last asking the latter to stop sanctioning of new TUFS project proposals on the ground that funds available for reimbursing the interest subsidy provided under the scheme had overshot the demand by three times. Though MoT has since allowed the banks to resume processing the new TUFS proposals, the restriction on sanctioning of loan continues.

In the last fiscal, the TUFS fund availment fell to Rs 363 crore against the Ministry's allocation of Rs 467 crore or so. But between February and July this year, the industry's TUFS claims had shot to Rs 1,551 crore against the allocation of Rs 535 crore for the fiscal 2006-07.

The Finance Minister had assured a textile industry delegation, which called on him, that his Ministry would continue to provide funds for TUFS in the event of the Textile Ministry providing proper estimation of the funds required, Mr Arumugam said.

TUFS utility

As for the utility of TUFS in scaling up modernisation of the textile industry, the SIMA chief felt that the domestic textile industry's vision of achieving the full investment potential of Rs 1,40,000 crore by 2010 to lift up the country's textile production to $85 billion could be met only if the TUFS offering capital incentive is allowed to run without any interruption.

India needs to enlarge its spindle capacity by another 15 million in the next five years or so. Right now, the industry is witnessing annual spindle addition of 2.6 million and bulk of the investment is triggered by TUFS, which has also supported creation of new capacities in knitting, weaving and processing in the downstream manufacture.

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