The textile ministry plans to lay more emphasis on the weaving sector under the Technology Upgradation Fund Scheme (TUFS). The scheme, in its new avatar in the 12th Five-Year Plan, will include more incentives for the sector, official sources said.
“At the moment, the proposal is at the consultative stage and the message has been put forward that more emphasis needs to be laid on the weaving sector,” said A B Joshi, textile commissioner.
The scheme, which met with huge success in its first phase, has seen lukewarm response over the last couple of years, as the textile industry faced a slowdown resulting in not many takers coming forward to avail of the modernisation assistance under the scheme.
The scheme is currently in the Pre-Expenditure Finance Committee stage of the Planning Commission. The initial allocation proposed by the textile ministry is pegged at Rs 12,044 crore.
The Planning Commission had earlier given in-principle approval for the scheme to be included in the 12th Plan.
The amount which will be finally allocated to TUFS could differ from the amount the ministry has proposed.
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“Without making major fundamental changes in the scheme, we are also trying to increase credit flow to the power loom and processing sectors. These sectors would get a little more attention than other sectors,” the textile commissioner had said.
The scheme, first introduced in 1999, benefited projects involving investments worth Rs 2,08,000 crore. After the first allocation of about Rs 11,200 crore, a second tranche of Rs 1,972 crore was allocated for 2011-12 by the ministry of textiles. However, it drew poor response, leading to disbursal of just 13 per cent, or Rs 256 crore, during the financial year. The government then extended the scheme for another year, without allocating extra funds, on expectations companies would invest aggressively. However, the scheme again drew poor response.
The slowdown in the US and Euro zone has caused many textile companies to shelve their expansion plans on lower-than-expected demand, whichi discourages them from expanding their capacities.
Companies are also waiting for more clarity on the scheme before availing of the funds.