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The Union textiles ministry will propose a change in its Technology Upgradation Fund Scheme (Tufs), with a bit more help to the weaving sector and a bit less for the spinning segment. The revised scheme will go the Cabinet for approval.
The weaving sector is expected to get six per cent interest rate subvention, up from the present five per cent. The textile commissioner's office, the administering authority for Tufs, has had several rounds of consultation on this. Those in the sector say the spinning sector has improved over the years, with weaving now needing more of hand-holding.
The Planning Commission had earlier given in-principle approval for the scheme to be included in the 12th Plan, which commenced officially in 2012-13. The ministry had asked for Rs 12,000 crore. The amount to be finally allocated could differ. A source in the textile commissioner's office said, "Without making major changes in the scheme, we are also trying to increase credit flow to the power loom and processing sectors."
First introduced in 1999, the scheme is estimated to have benefited projects involving investments worth Rs 208,000 crore. After the first allocation of about Rs 11,200 crore, another Rs 1,972 crore was allocated for 2011-12 by the ministry. However, it drew a poor response, leading to disbursal of just Rs 256 crore during that year. The government then extended the scheme for another year, without allocating extra funds, on expectations that companies would invest aggressively. However, the scheme again drew poor response.
The explanation is that in the past two years, textile companies have slowed their earlier expansion plans due to economic uncertainty in major economies, which have hit export and output in the sector.
