Textile units keep off Tech Upgradation Fund

With more investments, more orders and increased production capacities, the textile sector in Tamil Nadu is experiencing a boom after the abolition of quota.

But most of the textile units in the region keep away from utilising the loan facilities available under the Credit Linked Capital Subsidy System (CLCSS) and Technology Upgradation Fund (TUF) schemes.

CLCSS was introduced in 2000 with an aim to facilitate the technology upgradation of small scale industries (SSIs) across the nation with a sum of Rs 1,600 crore. But so far, only a sum of Rs 20 crore has been utilised and Tamil Nadu's share is just Rs 3 crore.

Similarly, performance under TUF over the past five years has been below expectation in terms of investment in the textile and powerloom sectors. The powerloom sector, which accounts for 68 per cent of the total cloth production, availed only 1 per cent of the sanctioned amount under the scheme.

The Union Ministry of Small Scale Industries has extended the scheme till March 31, 2007. The ministry has also raised the loan ceiling from Rs 40 lakh to Rs 1 crore. The rate of subsidy also has been increased from 12 per cent to 15 per cent.

"With the extension of time from 2005 to 2007 and the rise in loan ceiling from Rs 40 lakh to Rs 1 crore, the SIDBI hopes at least 40 units will benefit under CLCSS. For the last two years, we facilitated some 55 companies including general electric and medium sized foundries," K Natarajan, deputy general manager, SIDBI, Coimbatore, told Business Standard.

Despite these sops, the scheme would remain a non- starter if the nodal agencies like Sidbi and Nabard fail to undertake concerted awareness programmes among the entrepreneurs by involving various Primary Lending Institutions (PLIs), according to industrial sources.

Sources feel that the government should make the meeting compulsory at least once in three months.

"Categorisation of industries should be abolished and all viable and feasible SSIs should be permitted to avail themselves of the funds under this scheme", sources said. At present, 44 industries have been listed as beneficiaries to get the loan subsidies.

According to K Ilango, secretary, Codissia, the system is facing demand problems also from potential creditworthy borrowers. The factors which impact credit demand include inadequacies of knowledge management and gaps in information aggravate the uncertainty about cost pattern and return on investment and so on for SSIs.

Sidbi and Codissia along with other implementing agencies like Small Industries Service Institute (SISI) and Nabard are also planning to conduct regular awareness and feedback programme on CLCSS, to spread awareness among the entrepreneurs and businessmen in the region.