Cabinet allocates Rs.7,400 crore more for modernisation

The flagship Technology Upgradation Fund Scheme of the Union Textiles Ministry is all set to be resumed after being suspended on June 29 last year for want of funds.

The Cabinet Committee on Economic Affairs (CCEA) on Tuesday approved the Ministry's proposal for provision of Rs.1,972 crore for new projects during the remaining months of the current Plan period.

In addition, the panel cleared an additional Rs.5,432 crore for the scheme to meet the liabilities towards the projects that have been already sanctioned.

With this, the allocation for the scheme for the XI Plan has been enhanced to Rs. 15,404 crore from Rs.8,000 crore, a rise of Rs.7,404 crore.

The panel also approved certain modifications in the scheme to provide for promotion of investments in sectors such as weaving, which have now very low investment as well as to address the issue of fragmentation and lack of forward integration and to ensure greater administrative and monitoring controls.

The restructured TUFS provides for higher capital subsidy along with interest reimbursement for installation of first handlooms. Five per cent interest reimbursement and 10 per cent capital subsidy would be provided on brand new shuttleless looms, while 5 per cent interest reimbursement would only be provided for second-hand looms and that too only those up to 10-year vintage.

This apart, under the 20 per cent margin money scheme (MMS), capital ceiling would be raised to Rs.5 crore from Rs.2 crore and capital subsidy to Rs.60 lakh from Rs.20 lakh. The subsidy cap for brand new shuttleless loom would be Rs.1 crore and that for independent preparatory units covered under the 20 per cent MMS scheme Rs.60 lakh. The 15 per cent MMS gap would be raised from Rs.15 lakh to Rs.45 lakh.

Giving details of the changes, official sources said there would be significant improvements for other sectors also. Investments for modernisation in processing units would be eligible for 5 per cent interest reimbursement and 10 per cent capital subsidy.

Modernisation programmes in garmenting units would be eligible for 5 per cent interest reimbursement and 10 per cent capital subsidy.

Investments on factory building, pre-operative expenses and margin money for working capital would be eligible for reimbursements for the apparel and handloom sectors, with a cap of 50 per cent. Land costs would, however, be excluded from eligible investments under the scheme.

Technical textiles

For technical textile units also, investments for modernisation would be eligible for 5 per cent interest reimbursement and 10 per cent capital subsidy, while investments in the silk sector would be eligible for 5 per cent interest reimbursement or 25 per cent capital subsidy on benchmarked machinery on a par with the handloom sector.

In addition, the 15 per cent MMS scheme for small scale units (SSIs) would be continued with a capital ceiling of Rs.5 crore against Rs. 2 crore and subsidy cap of Rs.45 lakh against Rs.15 lakh.

The sources said the TUFS scheme had been restructured in such way that the subsidy out-go was not open-ended and had a definite cap of Rs.1,972 crore. Besides, all eligible claims would be pre-authorised by the Textiles Commissioner before approvals and there would be intensive monitoring by an inter-ministerial committee chaired by the Textiles Secretary.

Repayment schedule

The repayment period has also been reduced to seven years from ten years, but with the two-year moratorium remaining intact.

The eligibility of restructured/rescheduled cases would be restricted to the initial loan repayment schedule. “Ballooning of subsidy in rescheduled cases will be avoided.''

The sources said the new projects that were to be sanctioned during the remaining parts of the five year plan was expected to leverage an investment of Rs.46,900 crore. The Textile Commissioner would conduct road shows in select cities soon to popularise the new scheme.

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