The textile industry which was benefited by the scheme from 1999 to the tune of Rs 32000 crore by way of low-cost loans. The current Budget has extended the TUFS for the entire 11th plan period. The interest subsidy is borne by the government encouraging the lenders to sanction huge amounts to spinning, composite and garmenting units.
The government is yet to reimburse the lenders Rs. 1000 crores for loans sanctioned last year. The Budget has allocated Rs 911 crore this year for TUFS which the industry feels is not sufficient considering that the lenders have stopped disbursement of sanctioned loan amounts from the last quarter.
The textile industry feels the decision to extend the TUFS benefits to producers of raw materials like polyester and viscose fibres will result in reduction of their share of TUFS benefits.
The textile industry is wondering as how the government has given approval for including Synthetic fibre manufacturers in the TUFS scheme. These kind of industries are very less compared to the total textile industry strength and they are in a position to source their needs without the government supprot.
The TUFS has attracted sanctions worth Rs 2,990 crore from banks two years ago and it is on continuous increase as the textily industry is attracting huge investments in the last couple