Technology Upgradation Fund Scheme

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The Cabinet Committee on Economic Affairs on August 29, 2013, gave its approval for continuing the Technology Upgradation Fund Scheme (TUFS) during the 12th Plan period with a major focus on powerlooms in accordance with the Budget announcement for the financial year 2013-14.

The total budget outlay for continuation of the scheme will be about Rs 11,900 crore, out of which Rs 2,400 crore have been allocated for the financial year 2013-14.

The major features of the scheme are:

  • To promote indigenous manufacturing of the textile machinery, Interest Reimbursement (IR) on second hand imported shuttleless looms shall be reduced from 5 percent to 2 percent
  • For new shuttleless looms capital subsidy would be raised from 10 per cent to 15 per cent, IR from 5 per cent to 6 per cent, Capital Subsidy from 10 per cent to 15 per cent and margin money subsidy from 20 per cent to 30 per cent with an increase in subsidy cap from Rs 1 crore to Rs. 1.5 crore
  • Capital subsidy for handloom and silk sectors would be increased from 25 per cent to 30 per cent. In addition to this, margin money subsidy cap would be increased from Rs 45 lakh to Rs 75 lakh in respect of MSME and Jute sectors
  • Sectoral cap of 26 per cent will be applicable only for the spinning segment and sectoral caps for all other segments have been removed to enable balanced growth across the value chain
  • A pilot project for Hire-Purchase of new shuttleless looms shall be introduced with a plan outlay of Rs 300 crore within TUFS to enable poor powerloom weavers, having limited capacity to make capital investments, to upgrade their looms through payment of easy installments

These features will help induce capital investment in the textile sector to achieve growth in the fibre, yarn, fabric and garment production chain. It will generate 11.5 per cent annual growth in volume terms in cloth production and 15 per cent in value exports by increasing domestic value addition and technological depth and by enhancing the global competitiveness of textiles products to generate an additional employment to 15.81 million workers.

Background

Technology Upgradation Fund Scheme(TUFS) is one of the flagship schemes of the Ministry of Textiles and has helped the industry to garner investments of Rs 2.43 thousand crore. The scheme was launched in 1999 and has been instrumental in helping India achieve new heights in the development of the textile sector and particularly in the spinning segment.

The Finance Minister in his Budget Speech of February, 2013, had announced continuation of TUFS in the 12th Plan with a major focus on modernisation of the powerloom sector. Higher subsidies for weaving / powerloom sector have accordingly been planned in the continued TUFS.

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