India: Government Resolution of TUFS on techno-operational parameters released

Trade & Policy

India: Government Resolution of TUFS on techno-operational parameters released

Textile Ministry has notified the much awaited Technology Upgradation Fund Scheme (TUFS) through Government Resolution (GR) yesterday. Earlier, in August this year, the Cabinet Committee on Economic Affairs gave its approval for continuing the 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 scheme will be known as Revised Restructured Technology Up gradation Fund Scheme (RR-TUFS).

The RR- TUFS Scheme in 12th Plan shall continue leveraging investment in technology upgrading in the Textile sector to enable them to face global competition with focus on balanced development across the value chain by (a) Addressing the issues of fragmentations and promoting forward integration; (b) Promoting investments with smaller investments in MSME sectors; (c) Introduction of a Hire Purchase Financing Model for weaving sector.

The financial and operational parameters of the RR-TUFS would be as below:

1. The total subsidy outflow to stand alone spinning sector will be kept 26% of the plan allocation (i.e., Rs. 11952.80 crore) including committed liabilities of spinning sector of erstwhile TUFS , RTUFS and fresh sanctions in the 12th Plan period.

2. A pilot project on technology upgradation of powerloom sector by way of hire purchase scheme with an outlay of Rs. 300 crore shall be implemented.

3. 10% of the approved outlay for new sanctions will be earmarked for Micro, small and Medium Enterprises (MSME).

Subsidy benefits under RRTUFS for 12th Plan period

Spinning Sector

1. Stand alone spinning units – 2% Interest Reimbursement (IR) for new stand alone / replacement / modernization of spinning machinery. Minimum spindle capacity 8000 and volume cap of 250 crore on project cost.

2. For units having spinning capacity with forward integration having matching capacity in weaving / knitting/ processing / garmenting – 5 % IR.

Weaving Sector

1. 6% IR and 15% capital subsidy on brand new shuttleless looms or 30% Margin Money Subsidy (MMS) on brand new shuttleless looms for power loom sector.

2. 2% IR or 8% MMS on second hand imported shuttleless looms with 10 Years vintage and with a residual life minimum 10 years.

3. For 30% MMS – capital ceiling caps of Rs. 5 crore and subsidy cap of Rs. 1.5 crore would be adhered to for encouraging adequate investments by the MSME sector.

Processing, Garmenting and Technical Textile Sector

1. Processing- 5% IR and 10% capital subsidy for specified processing machinery. CETP will not be considered for support under TUFS.

2. Garmenting- 5% IR and 10% capital subsidy on specified machinery for garments units.

3. Technical Textiles (including non-woven’s) – 5 % IR and 10% capital subsidy in specified machinery required in manufacture on technical textiles.

4. Handloom and silks sector – 5% IR or 30% capital subsidy on benchmarked machinery.

5. MSMEs including jute sector – 5 % IR or 15 % MMS – subsidy ceiling to be Rs. 75 lakh.

Other Sectors

1. Cotton ginning and pressing, Wool scouring combing and carpet twisting, Synthetic filament yarn texturising, crimping and twisting, Viscose staple fiber and viscose filament yarn, Knitting and fabric embroidery, Weaving preparatory machines, Made-up manufacturing, CAD, CAM and design studio and Jute industry – 5% IR.

2. Investments like factory buildings, pre-operative and margin money for working capital are eligible for benefit of reimbursement under the scheme only for Apparel and Handloom sector with 50 caps of total new eligible investments under RR-TUFS. Land is altogether excluded from eligible investments under TUFS .This benefits however, shall not be available for textile units under the Scheme for Integrated Textile Park (SITP).

3. Period of interest reimbursement- Interest reimbursement will be restructured cases will be for a period 7 years including 2 years of moratorium/ implementations.

4. Eligibility of restructured / rescheduled cases – subsidy in restructured cases will be restricted to the quantum approved of subsidy approved of subsidy as given in the initial loan repayment schedule.

Duration of the Scheme

The scheme in the R-TUFS form was extended for the first year of the 12th Five Year Plan i. e., up to 31st March 2013. The proposed parameters under RRTUFS would be applicable from 1st April 2013. Terms loans sanctioned during the financial year 2012-13 would be eligible for subsidy as peer parameters of R-TUFS. However, the subsidy caps as per the proposed norms would be applicable on all subsides dispensed on and are after 1st April 2013. In respect of the cases pertaining to sectors where there is no change in admissible extent of subsides and are pending for issuance of UID due to non-availability of sectoral cap in the previously extended scheme up to 30th March 2013, to be considered for the issue of UID under the continued TUFS scheme. However, cases pertaining to spinning, weaving sectors etc. where there are changes in subsidy pattern, would be required to apply afresh as per revised terms and conditions under continued TUFS.