India: amended TUFS offer wider financial gains to textile industry

The Union Ministry of Textiles recently introduced Amended Technology Upgradation Funds Scheme (ATUFS) that will offer wider financial and operational benefits to all textile players. The scheme, first introduced in 1999, to improve operational efficiency of textile units, was later upgraded to encourage new investments in the sector. The scheme has so far, attracted billions of rupees in investment. Under this scheme, co-operative banks can lend money to textile units for technology upgradation. The scheme, set to benefit the synthetic textile sector immensely, has also been extended to limited liability partnership (LLP) firms.

The ATUFS was launched in place of erstwhile Technology Upgradation Fund Scheme (TUFS) in 2016 for sevenIndia Amended TUFS offer wider financial gains to textile industry for seven years ending March 2022. The financial and operational parametres and implementation mechanism for ATUS were notified in February 2016. The government provides credit-linked subsidy under the scheme.

Interestingly, the scheme was fraught with difficulties. Therefore, the Ministry of Textiles allowed, for the first time textile units to benefit from this scheme in addition to other benefits availed from the state governments.

Subsidy prospects

Under the new scheme, those who had applied for unique identification number (UID) under revised and restructured technology upgradation fund scheme (ARTUFS) before January 12, 2016 but UIDs could not be issued due to non-availability of funds, will be given a one-time opportunity to apply for subsidy under ATUFS.

The revised technology specification for machinery of the eligible segments would be prescribed annually in advance by the technical advisory and monitoring committee (TAMC) effective from April 1 of the year. The revised guidelines will allow textile commissioner to constitute a technical committee, which will assist the TAMC to prepare an indicative list of machinery manufacture. The committee will meet monthly to update the list of machineries and manufacture. Most importantly, accessories, attachments, sample machines and spares procured from other manufacture enlisted in the indicative list will also be eligible for subsidy up 20 % of basic cost of machinery.

Except in the case of merger, acquisition, amalgamation or takeover of an entity, the plant and machinery bought with TUFS subsidy shall not be disposed off before 10 years of the date of purchase without prior approval of the textile commissioner.

Government initiatives

The government has been assisting textile plays with timely policy support. In June last year, it announced an INR 60-billion package which helped attract INR 270 billion fresh investment till early March 2018.

Apex industry body, the Confederation of Indian Textiles Industry (CITI), reported a 4 per cent decline in textile and apparel exports at INR 2,279 billion for the financial year 2017-18 from INR 2,382 billion the previous year. While textile exports declined marginally by one per cent to INR 1,202 billion at the end of fiscal 2018 from INR 1,217 billion a year ago, apparel exports saw a sharp drop of 8 per cent to INR 1,077 billion as against INR 1,165 billion in the fiscal 2017.