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Govt to revamp ATUFS modernisation scheme for textiles

Oct 19, 2021
Govt to revamp ATUFS modernisation scheme for textiles

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

Image Source: Google Images

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