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Gradual reduction of TUFS' disbursement bothering textile ministry

While the Union government's recent Rs 6,000 crores package is aimed at generating 10 million jobs in the textile sector and boost exports by around $30 billion over three years and to encourage fresh investment in the sector, a look at the disbursement of the technology upgradation fund scheme (TUFS) to the textile industry shows a dismal picture.

As against disbursements worth roughly around Rs 24,000 crores in 2008-09, the same has more than halved to Rs 10,000-11,000 crores in 2014-15. Add to that, out of the total Rs 17,822 crores allocation made under multiple TUF schemes including modified (M-TUF), restructured (R-TUF) and revised restructured (RR-TUF) schemes, around Rs 8,000 crores of disbursement is still awaited.

Industry bodies and players say, while the recent Rs 6,000 crores package in terms of duty drawback to boost exports is welcome, the textile ministry will have to expedite disbursements to boost investment in the industry. According to K Selvaraju, secretary general of Southern India Mills Association (SIMA), investments are witnessing a downward trend. Like from 2013 onwards, investments have come down drastically. Not only has the TUF disbursement slowed down, but the government also brought down the subsidy gradually. Moreover, the TUFS disbursement excluded the spinning industry that has been showing the highest potential of fresh investments. On the contrary, other textile value chains where investments were slow saw higher allocation.

In terms of apparel exports, India continues to face stiff competition from Bangladesh and Vietnam the apparel exports of which is growing at 14 and 11 per cent as against India's eight per cent. According to the textile industry, the government will have to up the ante on TUFS disbursement, especially towards spinning, weaving and fabric manufacturing units in order to boost overall apparel exports.

Meanwhile, Confederation of Indian Textile Industry (CITI) says, the reduction in disbursement is also a conscious call in order to phase out of the previous TUF schemes to make way for the Amended TUF Scheme (A-TUF) and clear the backlog.