The
government is planning a major revamp of its flagship incentive scheme for
capital investments in the textile and garment sector to improve its
performance.
The
aim is to align its objectives with other recently-launched programmes,
including the production-linked incentive (PLI) scheme and mega parks. The
Amended Technology Upgradation Fund Scheme (ATUFS) is supposed to mobilise
fresh investments of about Rs 950 billion in the textile and apparel sector by
FY22 and create 3.5 million new jobs.
The
new scheme will focus on expeditious subsidy disbursement for large investments
and better incentivise segments that have high employment potential, said one
of the sources. The thrust on technical textiles and man-made fibre products
could be raised, in sync with the recently-launched Rs 106 billion PLI scheme
for these segments, he added.
The
new scheme will likely be designed to help the fragmented textile and garment
industry acquire scale and boost exports, and complement the PLI and the mega
textile park schemes. It would also facilitate the upgrade of existing looms to
better-technology ones, ensure quality in processing and curb fabrics imports
by garment firms.
The
TUFS, the earliest version of the ATUFS, was introduced in 1999 to make
available funds to the textile industry for upgrading technology at existing
units as well as for setting up new ones with state-of-the-art facilities. The
idea was to improve their viability and competitiveness in both the domestic
and export markets. Under the extant scheme (ATUFS), garments and technical textiles firms
are provided a 15% subsidy on capital investments, subject to a ceiling of Rs
300 million for each investor. Remaining segments, such as weaving, processing,
jute, silk and handlooms, get 10%, with a cap of Rs 200 million.
The
capital-intensive spinning industry has been the largest beneficiary of the
TUFS, as most of the investments have taken place in this segment.
Source: Financial Express
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