Banks Lack Procedural Knowhow To Pass On ATUFS Subsidy To Technical Textile Sector

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Banks Lack Procedural Knowhow To Pass On ATUFS Subsidy To Technical Textile Sector

In a recently concluded workshop held by Indian Technical Textiles Association (ITTA) for a one-to-one interaction between entrepreneurs and a senior official form the ministry of Textiles, the majority of the individual complaints from the entrepreneur side centered on non-cooperation from banks and hurdles faced by the government’s setting up of the Joint Inspection team (JIT) to verify the authenticity of the claims made for subsidies intended for technological upgrades.

The story dates back to January 2016, when the government launched a new scheme that was christened Amended Technology Upgrade Fund scheme (ATUFS).Under the scheme, provision for one time capital subsidy will be provided for investments in the employment generating and technology intensive segments of the textile value chain. This was against the backdrop of promotion of exports and import substitution. The scheme was deemed valid till March 31,2022.

Under the aegis of this scheme technical textiles and garments were eligible for 15 percent subsidy on purchase of machinery with a maximum cap of Rs. 30 crores. Many entrepreneurs participating in the workshop have complained bitterly against banks being uncooperative towards processing their subsidy amount even though all their papers were in order and they were legally entitled to the subsidy.

When queried about this, a highly placed official in ITTA, responded: “It is not that banks are unwilling to pass on the subsidy to the entrepreneurs. In fact, the government has set up a separate TUFS cell in each scheduled bank both public and private. However, there are many instances where the staff handling the processing of the subsidy does not have proper knowledge of the rules. This is what poses hurdles for the entrepreneurs.”

The official elaborated that there was a proper procedure laid out for availing the subsidy by the government and the rules were also transparent. “However, the knowledge gap that results because of lack of prior exposure might lead to such anomalies,” he added.

One other point that seemed to bother many entrepreneurs was that they felt they were subject to harassment by the government’s new requirement of inspection by a joint team of textile technicians and commercial experts. The procedure related to this commences from the time of allotment of Machine Identification Code (MIC) by the Textile Commissioner for the machinery purchased by the subsidy applicant. The MIC is auto-generated and is supposed to be allotted to the subsidy applicant once the applicant submits a request for inspection by a Joint Inspection Team (JIT) for verification after installation or commissioning of the machinery.

The JIT stipulation came into effect from 29^th February 2016 under a government gazette issued by the ministry of textiles. According to the official, “This came into place after it was brought to the notice of the government that in some instances the subsidy scheme was being misused. This made the government sit up and take notice and they felt it mandated the presence of a body that can physically verify the claims made by the applicant for subsidy.”

The official however, professed that he had no knowledge of any harassment taking place because of the ushering in of the JIT in the procedure to clear any subsidy claim made by an applicant. On the face of it, there were some individual entrepreneurs who had expressed the sentiment that they had a bad experience ever since the introduction of the JIT in the gazette clause.

It may be recalled that the government had introduced the ATUFS with the objective to promote ease of doing business in the country and enhance scope for make in India, the government’s pet project.