In what could come as a leg-up for the textiles sector, the Centre is set to re-start its popular Technology Upgradation Fund Scheme (TUFS). The Union Cabinet is expected to give its approval to revive the scheme, which is likely to be re-started by the month-end, Ms Rita Menon, Secretary, Ministry of Textiles, said here while inaugurating a stakeholder consultation meeting on technical textiles, organised by Federation of Indian Chambers of Commerce and Industry and the Ministry of Textiles.

The Union Budget for 2010-11 had provided for an allocation of Rs 2267.50 crore, of which around Rs 1,500 had been sanctioned in the first quarter of the fiscal. In June last year, the Government had abruptly asked banks to suspend new sanctions under the scheme, till such time the new fund allocation is approved by the Cabinet Committee on Economic Affairs (CCEA).

“An in-principle approval to re-start sanctions under TUFS has been granted by the Finance Ministry. The decision needs to be ratified by the CCEA, which is likely to do it next week,” an official involved in the exercise said.

The scheme provides for reimbursement of 5 per cent out of interest actually charged by the lending agencies for facilitating investment in the modernisation of textiles and jute units and is operated through nodal agencies such as IDBI, Small Industries Development Bank of India, IFCI and major nationalised banks.

The Ministry had introduced the scheme in 1999 to boost investments in the textiles sector. TUFS was to last till 2007, but the Government had extended the scheme till 2012 in view of its popularity. The domestic textiles industry had been pressing for the continuation of the scheme, citing the need to constantly modernise plant and machinery to compete with competitors such as China, Vietnam and Bangladesh. During 2008-09 and 2009-10, Rs 2,631.38 crore and Rs 2,890 crore were released respectively under the scheme.

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