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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