No sops for units using old machines

The government is likely to withdraw the benefit of the popular Technology Upgradation Fund Scheme (TUFS) to units that install old machinery for modernisation.

The scheme that provides 5 per cent interest subsidy to units for upgrading their technology is being modified for the 11th Plan and the textiles ministry has asked Rs 11,000 crore for running it for five more years.

"The modifications in the scheme would be finalised by the end of this month in a meeting with the expenditure finance committee of the finance ministry," Textile Minister Shankersinh Vaghela said on Tuesday.

The expenditure finance committee is scheduled to meet on July 31 to finalise the modified TUFS.

Sources said in the modified scheme units using second-hand machinery for modernisation would not be entitled to the benefits. This is being done to ensure that the latest technology comes into the domestic textile sector.

Earlier, machinery that was up to 10 years old qualified for incentives under TUFS. According to sources, even the level of subsidy given to individual investors could come down.

The scheme that was launched in 1999 had become popular after the phasing out of quotas in the world textile trade. TUFS was set to expire in March, but after hectic lobbying by the textiles ministry and industry associations, it was extended for the 11th Plan period.

While announcing the extension, it was decided to modify the scheme taking into account recommendations of consultants. The government had appointed KSA Technopark to study the scheme and suggest ways to make it more effective.

In the 10th Plan, the government had given a subsidy of Rs 2,061.26 crore under the scheme.