The Government has restructured the Technology Upgradation Fund Scheme (TUFS) – the flagship scheme of Ministry of Textiles for upgradation of technology in the textile and jute sectors. Ministry of Textiles has issued the Government Resolution on Restructured Technology Upgradation Fund Scheme for the period 28.04.2011 to 31.03.2012 (both the days inclusive) with an overall subsidy cap of Rs.1972 crore during the period. The Government Resolution lays down the financial and operational parameters and implementation mechanism for the Restructured TUFS.

2. The objective of the present Scheme is to leverage investments in technology upgradation in the Textiles and Jute Industry, with a special emphasis on balanced development across the value chain. The major objectives of the present restructured TUFS scheme are as follows:- (a) Address the issues of fragmentation and promote forward integration by providing 5% IR for spinning units with matching capacity in weaving/knitting/processing/ garmenting; (b) promoting investments in sectors with low investment like processing; (c) reducing the repayment period to 7 years with 2 years moratorium to promote financial efficiency; (d) Technology upgradation in weaving by providing higher capital subsidy for establishment of new shuttle less looms. This would help to reduce and eventually phase out secondhand looms (e)Ensuring greater participation of SSI units by increasing the limits under this category; (f)The eligibility of restructured/ rescheduled cases to be restricted to initial loan repayment schedule and ballooning of subsidy in rescheduled cases to be avoided (f) revamped scheme to be structured in such a way that the subsidy out go is not open ended and has a definite cap of Rs. 1972 crores.; (g) Greater administrative and monitoring controls to be introduced with pre-authorization of all eligible claims by the Textiles Commissioner Mumbai, before approvals and intensive monitoring by the Inter Ministerial Steering Committee chaired by Secretary Textiles.

3. For loans sanctioned during 01.04.1999 to 28.06.2010, the then existing parameters and guidelines of TUFS would continue to apply. The Government has made provision of Rs.5432 crore towards committed liabilities for the cases sanctioned during the aforesaid period for the 11th Five Year Plan.

4. The financial and opera¬tional parameters of the Restructured TUFS in respect of loans sanctioned under the scheme would be as follows:

i). A reimbursement of 5% on the interest charged by the lending agency on a project of technology upgradation in conformity with the Scheme. However, for spinning machinery the scheme will provide 4% for new stand alone / replacement / modernisation of spinning machinery; and 5% for spinning units with matching capacity in weaving / knitting / processing / garmenting.

ii). Cover for foreign exchange rate fluctuation / forward cover premium not exceeding 5% for all segments except for new stand alone / replacement / modernisation of spinning machinery, the foreign exchange rate fluctuation / forward cover premium will be 4%.

iii). Additional option to the powerlooms units and independent preparatory units to avail of 20% Margin Money subsidy under Restructured TUFS in lieu of 5% interest reimbursement on investment in TUF compatible specified machinery subject to a capital ceiling of Rs. 500 lakh and ceiling on margin money subsidy of Rs.60 lakh. However, for brand new shuttleless looms the ceiling on margin money subsidy will be Rs.1 crore. A minimum of 15% equity contribution from beneficiaries will be ensured.

iv). An option to SSI textile and jute sector to avail of 15% Margin Money subsidy in lieu of 5% interest reimbursement on investment in TUF compatible specified machinery subject to a capital ceiling of Rs. 500 lakh and ceiling on margin money subsidy of Rs.45 lakh. A minimum of 15% equity contribution from beneficiaries will be ensured.

v). 5% interest reimbursement plus 10% capital subsidy for specified processing, garmenting and technical textile machinery.

vi). The Common Effluent Treatment Plants (CETPs) will not be covered under Restructured TUFS.

vii). 5% interest reimbursement plus 10% capital subsidy for brand new shuttleless looms.

viii). Interest subsidy/capital subsidy/Margin Money subsidy on the basic value of the machineries excluding the tax component for the purpose of valuation.

ix). 25% capital subsidy in lieu of 5% interest reimbursement on purchase of the new machinery and equipments for the pre-loom & post-loom operations, handlooms/up-gradation of handlooms and testing & Quality Control equipments, for handloom production units.

x). 25% capital subsidy in lieu of 5% interest reimbursement on benchmarked machinery of silk sector as applicable for Handloom sector.

xi). The Scheme will cover only automatic shuttleless looms of 10 years’ vintage and with a residual life of minimum 10 years. The value cap of the automatic shuttleless looms will be decided by the Technical Advisory-cum-Monitoring Committee (TAMC).

xii). Investments like factory building, pre-operative expenses and margin money for working capital will be eligible for benefit of reimbursement under the scheme meant for apparel sector and handloom with 50% cap. In case apparel unit / handloom unit is engaged in any other activity, the eligible investment under this head will only be related to plant & machinery eligible for manufacturing of apparel / handlooms.

xiii). Interest reimbursement will be for a period of 7 years including 2 years implementation / moratorium period.

xiv). The subsidy in restructured cases will be restricted to the quantum approved in the initial loan repayment schedule by the lending agency and submitted to the Office of the Textile Commissioner in the prescribed format.

xv). Common Effluent Treatment Plant (CETP) and other investments like, energy saving devices, in-house R&D, IT including ERP, TQM including adoption of ISO / BIS standards, CPP and electrical installations etc. will not be eligible under Restructured TUFS.

xvi). There will be an overall subsidy cap of Rs. 1972 crores from the date of this Resolution to 31.03.2012, which is expected to leverage an investment of Rs.46900 crore, with sectoral investment shares of 26% for spinning, 13% for weaving, 21% for processing, 8% for garmenting and 32% for others.

xvii). The Scheme will be administered with a two stage monitoring mechanism. The sectoral caps shall be reviewed for modification by the IMSC (Inter Ministerial Steering Committee), based on the recommendations of TAMC.

Textiles Commissioner , Ministry of Textiles
New Delhi, 1st May ,2011

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