Delay in disbursement of TUF subsidy choking the mill sector

The Textile ndustry seeks immediate government intervention as the inordinate delay in disbursement of TUF subsidy is impacting the working capital requirements of the respective units. Technology Upgradation Fund scheme has helped the textile industry to transform into a technologically advance industry but on the other end the delay in TUF subsidy disbursement is choking the mill sector.

Textile industry sources have expressed trepidation over the undue delay in disbursement of TUF (Technology Upgradation Fund ) subsidy. According to reports, a sum of Rs3,400 crore remains payable to the respective textile units.

D Prabhu, Secretary, Texpreneurs Forum said that the industry has the potential to double the capacity, but the long and endless wait for the TUF subsidy is putting off prospective investors.

Notwithstanding the delay in TUF subsidy disbursement, Prabhu also noted with concern the need for extending TUF coverage for projects sanctioned during the black out period (between June 29, 2010 and April 27, 2011).

The sudden suspension of the scheme for a period of 10 months between June 2010 and April 2011 created panic waves across the industry, and many projects that were in the pipeline got derailed due to unexpected change in policy.

The forum in its communication to Minister of State for Finance Jayant Sinha said that several trade bodies have taken up this issue, impressing the need for reinstating the scheme with retrospective effect to cover the broken period, but to no avail. It is learnt that projects sanctioned during this black out period stood at around Rs24,000 crore, which would otherwise have been eligible for an interest subsidy of Rs1,200 crore under the TUF scheme.

Texpreneurs forum has appealed to the textile ministry to consider its plea. Members of the forum are planning to visit the powers that be in Delhi to impress upon them the need for early and prompt disbursement of TUF subsidy.