TUFS, when launched in 1999, had an objective to grow India´s iconic textile industry and to a certain stage it did achieve that purpose. Because of TUFS, when quotas were abolished, India was put on the frontline map of global textile resources. Today textiles are the second largest employment generator in India after agriculture. Over the years TUFS has grown its own challenges and this has provided opportunities. High capital investment business, which is a result of TUFS? over leverage in the textile sector, has caused delays in subsidy allocations and reimbursements which has therefore, become fatal for certain companies.
Given Prime Minister Modi´s ´Make in India´ initiative, TUFS can play a major role for Indian manufacturing sector in textiles. TUFS allocation, which is currently in place from past allocations, needs to be given a hard look to protect the industry. An interest subsidy time frame increase is badly needed to help the Indian textile industry, which is highly leveraged and is fighting global competitiveness.
For future TUFS allocations, rather than having random allocations and initial interest subsidies, the programme needs to have a cap of interest after the initial subsidy and the interest rate should be based on an international index like the Wall Street Journal index. This will help keep the industry globally competitive. High interest rates take away any competitive advantage and puts severe stress on the industry, which is what we are facing today.
(Arun Agarwal is the CEO at Nextt Creations, USA. He can be contacted at: arun@nextt.com).