A big boost to weaving sector, says SIMA chief
The Technology Upgradation Fund Scheme (TUFS), the blue chip programme of the Ministry of Textiles, has been in vogue with effect from April 1, 1999, providing interest subsidy up to five per cent and capital subsidy up to 10 per cent for selected machinery in weaving; processing and technical textiles. The scheme has attracted over Rs. 2.53 lakh crores of investment in the textile industry and created over 15 million new jobs during the last 14 years. The scheme came to an end on March 31, 2012. However, the Government extended the scheme for the entire 12th Five-Year Plan period with an allocation of Rs. 11,900 crores and also Rs. 2,400 crores for 2013-14.
Though many State Governments came out with innovative textile policies, particularly Gujarat and Maharashtra, the investments came to a standstill in the absence of the new scheme. At the close of August, the Cabinet Committee on Economic Affairs cleared the new TUFS for the 12th Plan period.
In a press release, Mr. S. Dinakaran, Chairman, Southern India Mills’ Association (SIMA), has thanked the Minister for Textiles, Dr. K. Sambasiva Rao, for expediting the announcement of the scheme within a short period of assuming charge as Minister. He has thanked him for increasing the interest subsidy from five per cent to six per cent and also capital subsidy from 10 per cent to 15 per cent for new shuttleless looms.
Mr. Dinakaran has stated that due to inadequate technology in the weaving sector, the entire textile value chain could not achieve the envisaged growth rate. The Minister’s new announcement would certainly bring in more investment in the weaving sector and improve value addition.
Also welcomed is the higher purchase scheme for the powerloom sector by allocating Rs. 300 crores for it. This would enable the small and medium powerloom owners to modernize their technology level with the support of private players, particularly master weavers.
The Minister has raised the margin money subsidy from 20 per cent to 30 per cent and enhance the limit from Rs. 1 crore to Rs. 1.5 crore for the powerloom sector.
The SIMA Chairman has expressed confidence that the new TUFS would attract sizable investments in the shuttleless looms facility. He has also hailed the extension of TUFS for the spinning sector with 26 per cent sectoral cap.
Mr. Dinakaran is optimistic that the spinning sector would be given the existing interest rate subsidy to enable it to convert the surplus cotton of up to 100 lakh bales into yarn, fabric and other value-added products.
Texprocil in a bouyant mood
The Cabinet Committee on Economic Affairs has given its approval for continuing the TUFS during the 12th Plan period with a major focus on improving the weaving capacity in accordance with the Budget announcement for 2013-14.
Capital subsidy for new shuttleless looms has been raised from 10 per cent to 15 per cent and the rate of interest reimbursement has been increased from five per cent to six per cent. Further, the margin money subsidy has been raised from 20 per cent to 30 per cent with an increase in subsidy cap from Rs. 1 crore to Rs. 1.5 crores.
Welcoming the continuation of the scheme, Mr. Manikam Ramaswami, Texprocil Chairman, stated that as the Indian textile industry has emerged as the most competitive one in the world, there is a huge potential to increase Texprocil’s exports by 50 per cent year on year, thus adding another $5 billion in exports each year and another two lakh jobs each year, should capacity addition happen rapidly. Export market is not going to be a constraint given India’s enormous strengths. India, he said, can ‘push aside’ competition and grow even in a shrinking global market.
Mr. Ramaswami also requested the Government to include cases covered under the “blackout period” when the Government was in the process of fine-tuning the scheme, as should be, so that mills can have the necessary margin money to rapidly scale up and fully exploit the potential. Texprocil therefore earnestly requests the Ministry of Textiles to expeditiously decide on the inclusion of the black out period under the current TUFS.
A timely step:
A.T.E. Director
Commented Mr. G.V. Aras, Director, A.T.E. – Textile Machinery Division: “It’s heartening to note that finally the much-awaited revised TUFS has been approved by the Cabinet Committee on Economic Affairs. At least the suspense and the long wait for many textile companies is over. It seems that the focus of the new TUFS is on the powerloom sector as mentioned in the Budget announcement. There are certainly a few welcome features”.
The increase in the capital subsidy from 10 per cent to 15 per cent and interest reimbursement from five per cent to six per cent for new shuttleless looms and reducing interest reimbursement from five per cent to two per cent on second-hand looms is a really positive step. The simultaneous increase in subsidy cap from Rs. 1 crore to Rs. 1.5 crores will also be helpful. This will surely accelerate the much-needed investment in modernisation of the weaving sector.
Putting sectoral cap of 26 per cent on the spinning segment and removal of sectoral cap on all other sectors will definitely induce balanced growth in the textile value chain.
The only disappointment, he said, has been that the processing industry has not been given similar priority and importance as weaving, since both are equally weaker links in the value chain. The indigenous textile machinery industry also needs a similar status like the textile industry in TUFS, so that more investments can come in creating modern capacities in building world class textile machinery in India.
Moreover, the TUFS approval has come a little too late, as by that time the rupee has depreciated and interest rates are on the higher side. In spite of these negatives, many companies will come forward to reap the full benefit of TUFS for modernisation of their capacities and increasing the competitiveness of Indian manufacturing.
CITI highly optimistic
The Confederation of Indian Textile Industry (CITI) has welcomed the announcement of TUFS for implementation during the 12th Plan period.
In a statement, Mr. S.V. Arumugam, CITI Chairman, stated that the announcement will invigorate the entire textile sector which has just come out of a difficult period and is on the threshold of growth. The announcement of the scheme would encourage the much-needed investments in all the segments of the industry both for modernisation and expansion.
Mr. Arumugam appreciated the focus on the fabrics industry in the new scheme, and stated that the increase in the interest rate from five to six per cent and capital subsidy from 10 to 15 per cent for new shuttle-less looms would strengthen the fabric industry which is also vital for the growth of upstream segments like spinning and downstream segments like garmenting and home textiles.
Mr. Arumugam thanked the Government in general and the Textile Minister in particular for the announcement of the new scheme and for the improvements incorporated in the scheme. A large number of potential investors had been anxiously waiting for the announcement of the scheme and the investments would now get into stream. This, he added, would help the textile and clothing industry of the country to effectively utilise the opportunities currently opening up both in the domestic and international markets.
Picanol gives thumbs up
Reacting to the extension of TUFS, Mr. P. Kasiviswanathan, Head, Picanol India, said the textile industry had been waiting for this announcement for the last six months. Moreover, this announcement is not for one year but for the next five years. From Picanol’s perspective, this is tailor made for the weaving industry for its growth and development.
Under the scheme, new shuttleless looms capital subsidy would be raised from 10 per cent to 15 per cent. While interest rebate is increased from five to six per cent, capital subsidy is raised from 10 to 15 per cent.
Interest reimbursement (IR) on second-hand imported shuttleless looms would get reduced from five per cent to two per cent. Further, a pilot project for hire-purchase of new shuttleless looms would be introduced with a plan outlay of Rs. 300 crores within TUFS to enable poor powerloom weavers having limited capacity to make capital investments to upgrade their looms by payment of easy instalments.