10% capital subsidy for textile sector welcomed

The textile industry of Surat has welcomed the Centre's announcement of an additional 10 per cent capital subsidy for processing machines under the Technology Upgradation Fund Scheme (TUFS).

"The 10 per cent capital subsidy, in addition to the five per cent interest subsidy under TUFS, is a welcome move. The processing industry would be benefited from it, as it would enable the processing units upgrade and modernise their machinery," said Surat Art Silk Cloth Manufacturers Association chairman Arun Jariwala.

South Gujarat Textile Processing Association president Ramesh Gajjar said, "Many processing units of Surat have availed of the benefits under the TUFS so far. The additional 10 per cent subsidy would encourage more processors to opt for the scheme. This would help in upgradation of machinery, and would be beneficial for the processing sector."

According to the guidelines announced by the Centre last week, the 10 per cent additional subsidy will be available for composite as well as stand-alone processing units.

The subsidy will be provided on the investment made in the specified machinery between April 20, 2005, and April 19, 2006. Any disbursement made by the lending agencies for the specified machinery on or after April 20, 2005, will be eligible for the subsidy.

The notification stated that the subsidy will not be available for a processing project on the whole, but only on specified processing machinery, which include singeing machine, process and dye kitchen management system, computer colour matching machine, computer-controlled fabric inspection machine, automatic roll folding and packing machine, continuous relax dryer, sueding/peach fishing/raising/pile cutting machine, compacting machine, and others.

However, the processing project on the whole, including the specified machinery, will continue to be eligible for the five per cent interest incentive under TUF, it said.

The notification also stated that the capital subsidy will be worked out on the invoice price of the machinery. The invoice price would mean basic price plus excise duty and sales tax in case of indigenous machinery, and CIF price plus the customs duty in the case of imported machinery, it said.

The notification further stated that the 10 per cent subsidy will be available only for such projects where term loans have been sanctioned by the nodal agencies or co-opted principal lending institutes (PLIs).

The subsidy would be released by lending agencies at the time of disbursement of term loan for the specified machinery. The advance money would be placed by the nodal agencies with the PLIs, for releasing the capital subsidy on due dates, it added.