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India: Restructured TUFS extension to boost investment in Textile Sector

• By  Textile Excellence
• June 16, 2012

The Textile Ministry has extended the Restructured Technology Upgradation Fund Scheme (R-TUFS) for the textile sector, to March 31, 2013, after a inter-ministerial steering committee meeting.  According to a circular issued by the Office of the Textile Commissioner on 15^thJune, the R-TUFS for the sector has been extended by a year with immediate effect. Textile Commissioner’s office will issue Unique Identity Numbers (UID numbers) for new sanctions by 16^thJuly after looking into the unutilised subsidy cap of RS 1972 crores or full tenure subsidy of Rs 7052 crores and sector wise caps. Here to remember that R-TUFS has been launched on 28^thApril 2011 with an overall subsidy cap of Rs 1972 crores from the effective date till 31^stMarch 2012. This was expected to leverage an investment of Rs.46900 crores (US$ 8.5 billion at present value), with sectoral investment shares of 26% for spinning, 13% for weaving, 21% for processing, 8% for garmenting and 32% for others. However, weak market conditions have limited the entrepreneurs’ interest in investing in textile sector in FY 2011-12 and only about Rs.200 crore of subsidy amount was utilised.

How will R-TUFS perform in FY 2012-13?

R-TUFS is expected to perform better this financial year with the changed dynamics in the trade. Though the country’s GDP growth projections have come down to 5% level, the textile and apparel industry’s business dynamics are dependent on various other factors. Rupee’s weakness has graced India as the one of the most competitive textile raw material and finished product manufacturer in the world. In spite of the increase in input costs, Indian apparel and textile sector stands fairly competitive as the cost in other competing nations have increased at the same proportion. The most important competitor China’s cost increase in raw material and labour front is significantly higher than India and that gives the country a big thumps up. Also, political situation ahead of general election and labour unrest in Bangladesh can divert business to India. Thus, India might perform better in the textile trade in spite of the economic disturbances in EU zone as textile and apparel business is purely driven by competitiveness. In addition, the improving domestic market and the implementation of the special debt restructuring plan for the textile sector to improve investment.

Textile Excellence