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TUFS-
Technology Upgradation Fund Scheme |
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TUFS
Resolution - Ministry Of Textiles
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New
Delhi, the 24th March, 1999.
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| Objective |
The
Indian textile industry occupies a unique position in the Indian
economy in terms of its contribution to industrial production,
employment and exports. In spite of a strong fibre and production
base, for various historical reasons, this industry suffers
from severe technological obsolescence and lack of economies
of scale. While relatively high cost of state-of-the-art technology
and structural anomalies in the industry have been major contributory
factors, perhaps the singlemost important factor inhibiting
technology upgradation has been the relatively high cost of
capital, even in real terms, in India, especially for an industry
usually squeezed for margins. Given the significance of this
industry to the overall health of the Indian economy, its employment
potential and the huge historical backlog of technology upgradation,
particularly in the context of the liberalisation of the national
industrial and trade policy and globalisation of textile trade,
it has been emphasised by experts that in order to sustain and
improve its competitiveness and overall long term viability,
it is essential for the textile industry to have access to timely
and adequate capital at internationally comparable rates of
interest in order to upgrade its technology level.
In the light of the foregoing, it has
been felt necessary to make operational a focussed and time-bound
Technology Upgradation Fund Scheme (TUFS) which would provide
a focal point for modernisation efforts through technology upgradation
in the industry. The main feature of the TUF Scheme would be
a five percent reimbursement on the interest actually charged
by the identified financial institutions on the sanctioned projects. |
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| Resolution |
| It
is, therefore, resolved that a Technology UpgradationFund Scheme
be made operational for the textile, jute and cotton ginning
& pressing industries for five years with effect from the
1st of April 1999. The scheme will provide a reimbursement of
five percentage points on the interest charged by the lending
agency on a project of technology upgradation in conformity
with this resolution.
The scope of the scheme, eligibility
criteria and operational parameters are defined below : |
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| Scope
Of The Scheme |
The
following will be covered under the Technology Upgradation Fund
Scheme :-
- Cotton ginning and pressing.
- Textile industry covering :-
- Silk reeling and twisting
- Wool scouring and combing
- Synthetic filament yarn texturising,
crimping and twisting.
- Spinning
- Viscose Filament Yarn (VFY)
- Weaving, knitting including non-wovens,
fabric embroidery and technical textiles.
- Garment/made-up manufacturing
- Processing of fibres, yarns, fabrics,
garments and made-ups.
- Jute industry.
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- Definition Of Technology Upgradation
Technology Upgradation would
ordinarily mean induction of state-of-the-art or near-state-of-the-art
technology. But in the widely varying mosaic of technology
obtaining in the Indian textile industry, even a significant
step up from the present technology level to a substantially
higher one for such trailing segments would be essential.
Accordingly, technology levels are bench-marked in terms
of specified machinery for each sector of the textile industry.
Machinery with technology levels lower than that specified
will not be permitted for funding under the TUF Scheme.
- Eligible Machinery
Installation of the following types of machinery
in a new unit or in an existing unit by way of replacement
of existing machinery and/or expansion will be eligible
for coverage under TUF scheme :-
There will be two main scheme now
- Cotton Ginning and Pressing
- Spinning/Silk Reeling & Twisting/Wool Scouring
& Combing/Synthetic Filament yarn Texturising, Crimping
& Twisting.
- Manufacturing of viscose filament yarn
- Weaving/Knitting including non-wovens and Technical
Textiles
- Garment/Made-up manufacturing
- Processing of Fibre/Yarn/Fabrics/Garments/Made-ups
- Jute industry
- General
Eligibility Conditions
- Type
Of Units:
- Existing unit with or without expansion and new
units
- Existing units can modernise and/or expand with
the state of-the-art technology.
- New units must set up their entire facilities
only with the appropriate eligible technology.
- A unit can undertake one or more activities listed
at I-SCOPE OF THE SCHEME hereinbefore under the
scheme. However, multiple activities can be under
taken only in an integral manner, i.e., by way of
forward or backward integration. It is, however,
clarified that weaving/knitting and garment manufacturing
or weaving/knitting and processing or garment manufacturing
and processing will be considered as integral activities.
- Interpretation
Of Eligibility:
- The Government will constitute a Technical Advisory
Committee with the Textile Commissioner (convenor),
the Jute Commissioner and technical experts from the
Textile Research Institutions (TRAs), industry and academic
field covering the different segments, as members.
- If any question of interpretation or clarification
is raised by the Nodal Agency as to the eligibility
of any unit or machinery under the scheme, the views
of the Technical Advisory Committee appointed in this
behalf will be obtained.
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| Loans
Under This Scheme |
Under
the Technology Upgradation Fund Scheme, loans will be provided
subject to terms and conditions given below:
- Duration
of Scheme:
The scheme will be in operation for the period of five years
from 01.04.1999 to 31.03.2004. Loans sanctioned by the lending
agency till the last date of the duration of the scheme
period will be eligible under the scheme and the reimbursement
would continue to be available till the same is repaid as
per the normal lending period of the nodal agency.
- Amount
of loan:
The assistance will be need-based. There will be no minimum
or maximum limit for individual loans.
- Promoter’s
contribution:
To be decided by the lending agency on the basis of its
existing normal norms.
- Rate
of interest:
- Rupee
loan : Effective rate of interest charged to the concerned
borrower will be five percentage points lower than the
prevailing commercial rate of interest charged by the
Financial Institutions and Banks concerned; the Ministry
of Textiles will reimburse the five percentage points
under the scheme.
- Foreign
Currency loan : As applicable for normal Foreign Currency
loan. However, cover for exchange rate fluctuation not
exceeding 5% p.a. would be provided under the scheme.
- Period
of interest reimbursement : Interest reimbursement of
5% and/or cover for exchange fluctuation upto 5% p.a.
will be available during the period of loan as specified
in the Letter of Intent or as may be specified in the
loan document.In case of subsequent extension of the
repayment period, no reimbursement towards interest
and/or exchange fluctuation will be available for the
extended period.
If an account becomes a non-performing asset (NPA),
the interest reimbursement would not be available. The
interest reimbursement will be available from the date
of coming out of the NPA category. In default-free rescheduled
cases, reimbursement will be as per the original repayment
schedule.
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