Technology Upgradation Fund Scheme
The Government of India (GoI), Ministry of Textiles (MoT), introduced Technology Upgradation Fund Scheme (TUFS) for Textile and Jute Industries on April 1, 1999, for a period of 5 years, subsequently extended by 3 years to cover sanctions up to March 31, 2007. The Scheme has been modified w.e.f. April 1, 2007, for a period of 5 years i.e. to last till FY 2011-12. However, the Scheme was discontinued from June 29, 2010 till April 27, 2011 and loans sanctioned during the said period to the textile units were not covered under the Scheme. The Scheme was re-launched w.e.f. April 28, 2011 as Restructured-TUFS (i.e. R-TUFS) initially for the period upto March 31, 2012, which was further, continued till March 31, 2013. R-TUFS is introduced with an overall subsidy cap of Rs.1972 crore, with sectoral allocation of 26% for spinning, 13% for weaving, 21% for processing, 8% for garmenting and 32% for others. R-TUFS was expected to leverage an investment of Rs.46, 900 crore.
Technology Upgradation Fund Scheme features
A reimbursement of 5% on the interest charged by the lending agency on a project of technology upgradation in conformity with the Scheme. However, for spinning machinery the Scheme will provide 4% for new stand alone / replacement / modernisation of spinning machinery; and 5% for spinning units with matching capacity in weaving / knitting / processing / garmenting.
Cover for foreign exchange rate fluctuation / forward cover premium not exceeding 5% for all segments except for new stand alone / replacement / modernisation of spinning machinery for which the foreign exchange rate fluctuation / forward cover premium will be 4%.
Additional option to the power loom units and independent preparatory units to avail of 20% Margin Money subsidy under Restructured TUFS in lieu of 5% interest reimbursement on investment in TUF compatible specified machinery subject to a capital ceiling of Rs. 500 lakh and ceiling on margin money subsidy of Rs.60 lakh. However, for brand new shuttle less looms the ceiling on margin money subsidy will be Rs.1 crore. A minimum of 15% equity contribution from beneficiaries will be ensured.
An option to SSI textile and jute sector to avail of 15% Margin Money subsidy in lieu of 5% interest reimbursement ( 4% Interest Reimbursement for stand Alone spinning machinery )on investment in TUF compatible specified machinery subject to a capital ceiling of Rs. 500 lakh and ceiling on margin money subsidy of Rs.45 lakh. A minimum of 15% equity contribution from beneficiaries will be ensured.
5% interest reimbursement plus 10% capital subsidy for specified processing, garmenting, technical textile machinery and brand new shuttle less looms.
Interest subsidy / capital subsidy / Margin Money subsidy on the basic value of the machineries excluding the tax component for the purpose of valuation.
25% capital subsidy in lieu of 5% interest reimbursement on purchase of the new machinery and equipments for the pre-loom & post-loom operations, handlooms / up gradation of handlooms and testing & Quality Control equipments, for handloom production units.
25% capital subsidy in lieu of 5% interest reimbursement on benchmarked machinery of silk sector as applicable for Handloom sector.
The Scheme will cover only automatic shuttle less looms of 10 years vintage and with a residual life of minimum 10 years.
Investments like factory building, pre-operative expenses and margin money for working capital will be eligible for benefit of reimbursement under the Scheme meant for apparel sector and handloom with 50% cap. In case apparel unit / handloom unit is engaged in any other activity, the eligible investment under this head will only be related to plant & machinery eligible for manufacturing of apparel / handlooms.
Interest reimbursement will be for a period of 7 years including 2 years implementation / moratorium period.
The subsidy in restructured cases will be restricted to the quantum approved in the initial loan repayment schedule by the lending agency to the Office of the Textile Commissioner.
Common Effluent Treatment Plant (CETP) and other investments like, energy saving devices, in-house R&D, IT including ERP, TQM including adoption of ISO / BIS standards, CPP and electrical installations etc. will not be eligible under Restructured TUFS.