– RS Jalan, Managing Director, GHCL Limited
´The Textile Upgradation Fund Scheme (TUFS) is an interest subsidy scheme for upgradation of technology as part of measures to boost textile and jute sectors. Some say it is now plagued by issues including non-allocation of subsidy and delayed reimbursement´.
TUFS was introduced with an objective to upgrade and modernise the Indian Textile Industry by encouraging it to adopt modern technological processes and undertake capacity expansion. It turned out to be the only support for textile industry as export incentives on textiles in India have been curtailed drastically in the Foreign Trade policy for the year 2015-20. India has a huge labour cost disadvantage due to stringent and inflexible labour laws and higher wages. This in a way is rendering us uncompetitive against countries like Bangladesh and Vietnam who have both overtaken India in apparel exports. In this scenario, we cannot even think of withdrawing this scheme as it will lead to slow down of investments in textiles and a loss in terms of gaining market share and generating employment. But surely there are some aspects of TUFS which if addressed diligently can make this scheme a more effective one. Currently TUFS gets reimbursed by the government after a long gap, more than one to one and a half year. This creates a working capital issue for such a competitive industry.
We would like to suggest that the government should make provisions in a manner that the industry pays to the bank the interest amount after deducting the TUFS entitlement. This will bring a huge relief to the industry.
Further, currently TUFS approval takes a long time. So it will be better if the process is streamlined to make the approval faster. Further, if the government still wish to recast the scheme, I would suggest that the projects which have earlier been planned and the loan application have been made to the bank should not be denied of the benefits under TUFS.