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Has the TUF scheme failed to support growth of textile industry?
Spinning mills with latest technologies are now very common in the Indian Textile Industry
Since its inception in 1999, the Technology Upgradation Fund( TUF) scheme introduced by the Ministry of Textiles has seen many extensions, changes, additions and amendments, yet the scheme envisaged as a vehicle for modernisation and expansion of the textile industry and subsequently the textile value chain, has always been a matter of debate. Despite the existence of such a robust scheme, the latest report on the health of textile mills is discouraging with 682 textile mills shutting down in 2017. Of them, 232 mills were in Tamil Nadu, 85 in Maharashtra, 60 in Uttar Pradesh and as many as 42 such mills were in Haryana. Why the TUF scheme has failed to arrest the decay in the mills sector, is worthy of an analysis.
According to Government records, more than Rs. 21,000 crore has been provided as assistance to the industry during 1999-2015, yet the core issue of mass adoption of newer technologies, crucial for making the textile industry globally competitive and reducing soaring capital costs, still remains. Many mills are still operating with old machines and even older production methods and a‘ slow death’ is their inherent fate. On the other hand, companies like Arvind, Trident, Raymond, to name a few, which have invested in new technologies and production methods have been successful in not only remaining relevant in a competitive market, but also taking the leadership position in the textile segment.
While everyone unanimously agrees that though the intent of the scheme is very relevant, the implementation mechanism is cumbersome and prone to delays in payment. The main issue in TUF is the model of disbursement of funds. For example, 5 % interest subsidy means, one company after paying this interest to the banks should get reimbursement from the Government. This leads to multiple complications because of involvements of several banks and many stages of processes.“ TUF is useful, but we have to fine-tune the execution part. We have to design a new system like, companies can deduct the subsidy part interest during their payments to banks, and in turn bankers can claim from the Government as reimbursement. This model only will solve all the practical difficulties,” reasons Prabhu Dhamodharan, Convenor, Indian Texpreneurs Federation( ITF), Coimbatore.
There is enough evidence that TUF implementation at the bank end has had major issues, due to which many players have not received TUF for years and the reconciliation work has still not been completed. It’ s estimated that about Rs. 6,000 crore is stuck up due to such issues which for many companies is an issue of survival.
24 Apparel Online India | MARCH 1-15, 2018 | www. apparelresources. com