CCEA clears continuation of Rs 12k cr tech upgradation fund

NEW DELHI: The government today approved the continuation of Technology Upgradation Fund Scheme (TUFS) for the 12th Plan period (2012-17) with a budgetary allocation of Rs 11,900 crore.

It aims to generate 11.5 per cent annual growth in volume terms in cloth production, and 15 per cent in exports (value terms) by raising domestic value-addition and technological depth, said an official statement said.

It is also expected to generate additional employment of 15.81 million. The textiles industry employs 45 million people.

The government had suspended TUFS in June 2010, and restored the scheme in April 2011.

"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," Finance Minister P Chidambaram told reporters after the CCEA here.

The total budget outlay for continuation of the scheme will be about Rs 11,900 crore, of which Rs 2,400 crore has been allocated for the 2013-14 fiscal, he added.

During the 11th Plan, over Rs 15,000 crore was allocated for the scheme.

In the Budget, Chidambaram had announced that TUFS would continue with a major focus on modernisation of the powerloom sector. The higher subsidies for weaving/powerloom sector have been planned in the continued scheme, the statement said.

The major features of the scheme include promotion of indigenous manufacturing of textiles machinery and reduction in interest reimbursement (IR) on second-hand imported shuttle -less looms from 5 per cent to 2 per cent, it said.

It added that in case of new shuttle-less looms, the capital subsidy would be raised from 10 per cent to 15 per cent, IR from 5 per cent to 6 per cent, capital subsidy from 10 per cent to 15 per cent and margin money subsidy from 20 per cent to 30 per cent with an increase in subsidy cap from Rs 1 crore to Rs 1.5 crore.

In handloom and silk sectors, capital subsidy would be increased from 25 per cent to 30 per cent. In addition to this, margin money subsidy cap would be increased from Rs 45 lakh to Rs 75 lakh in respect of micro, small and medium enterprises and jute sectors, it added.

"These features will help induce capital investment in the textile sector to achieve growth in the fibre, yarn, fabric and garment production chain," the statement said.

The TUFS, which was launched in 1999, has been one of the popular schemes among the textiles units. Segments like spinning, cotton ginning and pressing, garments and weaving are the segments that have been benefited from the scheme.