Stimulus package for the textile sector announced by the government will have minimal impact on the sector in Gujarat as technology upgrade in the age of demand slowdown would hardly help, those associated with the industry said today.
The government yesterday allocated an additional 1,400 crore to clear entire backlog in Technology Upgradation Fund Scheme (TUFS) as a part of the industry stimulus package. There are over 4,000 small and big entrepreneurs enrolled under the scheme, in Gujarat.
“Stimulus package will have no impact on textile sectors of Gujarat when entrepreneurs are facing tough time due to global slowdown as the package only speaks of giving of loans under technology upgrade,” President of City Chapter of Textile Association of India T L Patel said.
“Entrepreneurs who took loan under TUFS are unable to repay the amount due to slack international market and poor offtake of exports this year,” he added.
“No new entrepreneur is enrolling under TUFS, since international demand for textile has fallen sharply. Even, the 4 per cent relaxation in Cenvat will have no impact on textile industry,” Patel said.
However, the new package is expected to clear the six-month old backlog of subsidy, the entrepreneurs here had been awaiting for, officials said.
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“Pending subsidy for technology upgrade for the last six months of over 4,000 small and big textile entrepreneurs registered under TUFS, will now get cleared with this additional allocation,” Deputy Director SP Verma told PTI.
Nearly 75 per cent of them are small entrepreneurs who opted for technology upgrade, Verma added.
The regional textile commissioner’s office here has also urged the government to reschedule loan repayment plan for funds sanctioned under TUFS, sources said.
The move is projected to boost the sagging sentiment of the textile industry here, they added.
Under the TUFS, government reimburses 4 to 5 per cent of the interest charged by banks and financial institutions, thereby ensuring credit availability for textile units planning to upgrade technology, officials said.