Textile cos find going TUF after stoppage of scheme

AHMEDABAD, COIMBATORE: The Tirupur Exporters’ Association has expressed disappointment over the circular issued by the office of Textile Commissioner, Mumbai, asking nodal agencies and banks not to sanction fresh loans under the Technology Upgradation Fund scheme.

The circular has been issued at a time when the industry is gearing up to invest in capacity expansion and modernisation and seeking extension of the scheme, the association president A Shaktivel said in a communication to finance minister P Chidambaram, textile minister Shankersinh Vaghela and textile secretary DP Singh.

The ministry of textiles on Thursday asked banks and financial institutions to stop sanctioning fresh loans under the Technology Upgradation Fund scheme (TUFs) with immediate effect.

The Centre had introduced the TUFs for textile and jute industries, initially for a period of five years, beginning April ‘99 to March ‘04. The scheme, which was intended to facilitate the induction of modern technology in the textiles industry, provides 5% interest reimbursement on the loan availed under it. The government has extended the scheme by three years to cover sanctions up to March 31, ‘07.

The government was expecting an additional investment of Rs 30,000 crore in the sector in the current fiscal. “All expansion plans will go haywire. It is tragic, a disaster,” said an industry source.

The approved budget estimate under TUFs for the year ‘06-07 is Rs 535 crore against the estimated requirement of Rs 1,515 crore.

The government had planned to make arrangement for additional funds from the finance ministry. “However, pending this approval from the finance ministry it has been decided by the government to request all the lending agencies including nodal banks and financial institutions to stop sanctioning of fresh loans under TUFs with immediate effect,” the ministry said in a letter.