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Technology Upgradation Fund Scheme (TUFS) For Textile Entrepreneurs

Launched in 1999, TUFS is a flagship initiative by the Indian government under the Ministry of Textiles. Its primary aim is to facilitate the modernization and upgradation of technology in the textile and jute industries. The scheme was introduced to bolster the sector’s global competitiveness, reduce production costs, and improve product quality. Over the years, TUFS has played a significant role in transforming the landscape of the Indian textile industry. Here in this article, we have provided you with a complete guide about the Technology Upgradation Fund Scheme (TUFS) including features, eligibility, and contact details.

Also Read: Best Small Business Loans In India

Key Objectives of TUFS

Technology Upgradation: TUFS encourages textile manufacturers to adopt advanced technology, machinery, and equipment to enhance production efficiency and product quality.

Capacity Expansion: The scheme supports the expansion of existing textile units and the establishment of new ones, promoting industrial growth and job creation.

Energy Efficiency: TUFS focuses on reducing energy consumption by subsidizing the installation of energy-efficient machinery. This not only lowers operational costs but also contributes to a greener, more sustainable textile industry.

Skill Development: It emphasizes skill development and training for the workforce to ensure they are well-equipped to operate modern machinery and technology effectively.

Components of TUFS

TUFS comprises two main components:

Credit Linked Capital Subsidy Scheme (CLCSS): Under CLCSS, textile manufacturers receive financial assistance to upgrade and modernize their machinery and equipment. The subsidy is linked to the loan availed by the manufacturer, reducing the financial burden.

Interest Reimbursement Scheme (IRS): The IRS provides interest reimbursement on loans taken for technology upgrades. This encourages textile units to invest in advanced technology by making the cost of borrowing more affordable.

Read: How to Get a Business Loan from the CGTMSE Scheme

Success Stories and Impact

TUFS has brought about a sea change in the Indian textile industry, impacting various segments, including spinning, weaving, processing, and garment manufacturing. Some key achievements and impacts of the scheme include:

Increased Productivity

The adoption of modern technology has significantly increased productivity in textile units, resulting in higher production volumes.

Quality Enhancement

The improved machinery and equipment have led to the production of higher-quality textiles, boosting export opportunities and overall market competitiveness.

Employment Generation

As textile units expand and modernize, more job opportunities are created, benefiting both skilled and unskilled labour.

Energy Efficiency

The emphasis on energy-efficient machinery has reduced energy consumption and operational costs for textile manufacturers, making them more sustainable.

Global Competitiveness

Indian textile manufacturers have become more competitive on the global stage, leading to increased exports and foreign exchange earnings.

Challenges and the Way Forward

While TUFS has been instrumental in advancing the textile industry, it faces some challenges, including inadequate awareness among textile manufacturers, complex administrative procedures, and limitations in reaching smaller textile units. To address these challenges, a concerted effort from the government, industry associations, and textile manufacturers is required.

The future of the Indian textile industry largely depends on the continued support and evolution of schemes like TUFS. By ensuring the scheme remains responsive to changing industry dynamics and emerging technologies, India can maintain its position as a global textile powerhouse, contributing significantly to economic growth and job creation.

Features of the Revised Technology Upgradation Fund Scheme

  • Reimbursement of 5% on the interest charged by the lending agency on a project of technology up-gradation in conformity with the Scheme.
  • In weaving – (i) 6% Interest Reimbursement (IR) and 15% Capital Subsidy (CS) on brand new shuttleless looms or 30% Margin Money Subsidy (MMS) for the power loom sector. (ii) 2% IR or 8% MMS on second-hand imported shuttleless looms with 10 years vintage and with a residual life of 10 years; (iii) for 30% MMS- the capital ceiling of Rs. 5 crores and subsidy cap of Rs. 1.5 crore would be adhered to encourage adequate investment by the MSME sector.
  • Cover for foreign exchange rate fluctuation / forward cover premium not exceeding 5% for all segments except for new stand-alone / replacement/modernization of spinning machinery for which the foreign exchange rate fluctuation/forward cover premium will be 2%.
  • An option for the MSME textile and jute sector to avail of a 15% Margin Money subsidy instead of 5% interest reimbursement on investment in TUF-compatible specified machinery subject to a ceiling on margin money subsidy of Rs. 75 lakh.
  • 5% interest reimbursement plus 10% capital subsidy for specified processing, garments, and technical textile machinery.
  • Interest subsidy/capital subsidy / Margin Money subsidy on the basic value of the machinery excluding the tax component for valuation.
  • 30% capital subsidy instead of 5% interest reimbursement on benchmarked machinery of the silk sector as applicable for the Handloom sector.
  • The Scheme will cover only automatic shuttle-less looms of 10 years vintage and with a residual life of a minimum of 10 years.
  • Investments like factory building, pre-operative expenses and margin money for working capital are eligible for the benefit of reimbursement under the Scheme meant for the apparel sector and handloom with a 50% cap.
  • The interest reimbursement period is 7 years including the implementation/moratorium period.

Related: Best Government Subsidy For Small Business

Eligible Machinery for Technology Upgradation Fund Scheme

  • Cotton Ginning and Pressing
  • Spinning/Silk Reeling & Twisting/Synthetic filament yarn Texturising, Crimping & Twisting
  • Wool scouring, combing, and carpet industry
  • Manufacturing of viscose filament yarn and viscose staple fibre
  • Weaving / Knitting
  • Technical Textiles and non-wovens
  • Garment / Made-up manufacturing
  • Processing of Fibre/Yarn/Fabrics/Garments / made-ups
  • Jute industry
  • Machinery eligible under 10% capital subsidy for technical textiles including non-wovens
  • Machinery eligible under 10% capital subsidy for the garment sector
  • Process control equipment for various sectors
  • Machinery eligible under 20% margin money subsidy (MMS-TUFS) for the power loom sector
  • Machinery eligible under 10% capital subsidy for the processing sector
  • Brand new shuttleless looms eligible under a 10% capital subsidy for the weaving sector
  •  Machinery eligible for CAD, CAM, and design studio

Eligible Units for the Technology Upgradation Fund Scheme

  • Existing units with or without expansion and new units.
  • Existing units can modernize and/or expand with the appropriate eligible 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.
  • Textile / Jute units with 100% foreign equity.

Related: Pradhan Mantri Yuva Yojana for Entrepreneurs

How To Apply for Technology Upgradation Fund Scheme (TUFS)

You can apply for funding assistance online. First of all, log on to the official website of TUFS. Here, you will get a registration form. You have to Username, Password, and Verification code. After clicking the enter button, you can access the Integrated Technology Up-gradation Fund Scheme, Ministry of Textiles.

A beneficiary user needs to register first to access the application. Select the ‘Beneficiary Registration’ from the ‘Login screen’. Here, you have to fill out the form with the necessary information. After saving the data, you can track your application status frequently in the future. The form is a bit complicated. However, you can check the User Manuals for filling out the application form for the Technology Upgradation Fund Scheme correctly.

About Next What Business Research Team

The Editorial Staffs at NextWhatBusiness is a team of Business Consultants with years of experience in small and medium-scale manufacturing and service-based businesses.