The Planning Commission has given in-principle approval for extension of the Technology Upgradation Fund Scheme (Tufs) for the textile sector in the 12th five-year Plan (2012-17).
The scheme in its revised version has got a poor response due to sectoral slowdown but the Union textile ministry is upbeat about it once the industrial scene improves.
Tufs was suspended in June 2010 and reintroduced in April last year, with Rs 1,972 crore for the year up to March 31. But the demand has been for hardly a tenth of the amount sanctioned. “This year, we have received proposals of Rs 200 crore for allocation and all of it will be honored,” said A B Joshi, textile commissioner. The textile ministry has asked for an outlay of Rs 13,000 crore for Tufs in the 12th five-year plan.
In the 2012-13 Union Budget, the government has removed customs duty on import of shuttleless looms. However, the industry feels a five per cent customs duty cut isn’t enough to encourage expansion and modernisation. Other factors like high interest rates would prevent the sector from massive expansion.
“The current macro economic scenario, involving dampening growth rates, higher interest costs and rising input prices leave little incentive for fresh investment,” said Ramesh Poddar, vice-chairman and managing director of Siyaram Suitings. Others in the sector feel likewise, that the five per cent customs duty won’t help much for the modernisation needed.
“Many textile players are not looking at expansion projects due to the current economic conditions,” said Mitesh Shah, vice-president (finance and corporate affairs) of Mandhana Industries.
