Technology Upgradation Fund Scheme (TUFS) For Textile Entrepreneurs

The Ministry of Textile launched the Technology Upgradation Fund Scheme to help the textile entrepreneurs in India. And now there is an ‘Amended Technology Upgradation Fund Scheme (ATUFS)’ with effect from 13.01.2016, for a period of seven years.

Basically, the scheme has a  provision of a one-time capital subsidy for eligible benchmarked machinery at the rate of 15%. The subsidy is for garments and technical textiles segments with a cap of Rs. 30 crores. In addition, one can avail of the subsidy at the rate of 10% for weaving, processing, jute, silk, and handloom segments with a cap of Rs. 20 crores.

Revised Technology Upgradation Fund Scheme Features

• 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 to MSME textile and jute sector to avail of 15% Margin Money subsidy in lieu 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 the purpose of valuation.
• 30% capital subsidy in lieu 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 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.

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Technology Upgradation Fund Scheme Scope

The Restructured TUFS covers the following segments:-

a) Cotton ginning and pressing.

b) Textile industry which includes: –

i) Silk reeling and twisting.
ii) Wool scouring, combing, and carpet industry.
iii) Synthetic filament yarn texturizing, crimping, and twisting.
iv) Spinning.
v) Viscose Staple Fibre (VSF) and Viscose Filament Yarn (VFY).
vi) Weaving, knitting, and fabric embroidery
vii) Technical textiles including non-wovens.
viii) Garment/design studio / made-up manufacturing
ix) Processing of fibers, yarns, fabrics, garments, and made-ups.

c) Jute industry.

Technology Upgradation Fund Scheme Eligibility Criteria

Eligible Machinery for Technology Upgradation Fund Scheme

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

Eligible Units for Technology Upgradation Fund Scheme

1. Existing units with or without expansion and new units.
2. Existing units can modernize and/or expand with the appropriate eligible technology.
3. New units must set up their entire facilities only with the appropriate eligible technology.
4. A unit can undertake one or more activities listed at I-SCOPE OF THE SCHEME hereinbefore under the Scheme.
5. Textile / Jute units with 100% foreign equity.

Also Read: Best Small Business Loans In India

Textile Machinery Eligible for Technology Upgradation Fund Scheme

Under the TUF Scheme, generally, you can avail of a subsidy only for new machinery. However, the following imported second-hand machines are also eligible under Restructured TUFS:

1. Air jet, Projectile, Rapier, and Waterjet shuttleless looms fitted with or without electronic jacquard / electronic dobby and with or without high-speed direct beam warper with creel and/or sectional warping machine with auto stop and tension control of up to 10 years’ vintage and with a residual life of minimum 10 years and with the value cap of Rs. 8.00 lakh per machine.
2. You have to furnish a certificate from a Chartered Engineer of the exporting country certifying the
   vintage and residual life of the imported second-hand machinery to the lending agency at the appropriate time as determined by the lending agency. Such a certificate is compulsory for any import of eligible second-hand machinery under this scheme irrespective of the value of such
   import.
3. Balancing equipment or equipment required for de-bottlenecking the production process will also be eligible for funding under Restructured TUFS.
4. Waste reduction equipment or devices will be eligible for funding under the Restructured TUFS.
5. The size of the technologically upgraded facilities of an existing unit or the size of the new unit must be of a minimum economic size (MES). MES for eligible segments of the industry should be any unit that is financially viable as per the viability analysis of the financial institutions or banks. MES for stand-alone new spinning units will be 8000 spindles.
6. All sample machines for all eligible machinery under Restructured TUFS for 5% / 4% interest reimbursement will be eligible.
7. Accessories / Attachments/spares received along with the machinery up to the value of 20% of the machinery cost or actual value whichever is lower are eligible.
8. Machinery eligible for one segment is eligible for other segments/activities also unless its eligibility is specifically restricted for a particular segment.
9. Eligibility of any other textile machinery equal to or higher than the benchmarked technology not listed in the annexures or developed in the course of the operation of Restructured TUFS will be, suo-moto or on reference, specifically determined by the Technical Advisory-cum-Monitoring Committee (TAMC) constituted by the Government.

Other Investments Eligible for Technology Upgradation Fund Scheme

1. factory building including renovation of factory building;
2. Preliminary and pre-operative expenses;
3. Margin money is required for working capital, specifically required for the technology upgrades.
4. In case the Apparel/handloom unit is engaged in other activities, the eligible investment under this head will only be related to plant & machinery eligible for the manufacturing of apparel/handlooms.
5. Investment in the acquisition of technical know-how including expenses on training and payment of fees to the foreign technicians.

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 @ http://www.itufstxcindia.gov.in/Login.aspx?ReturnUrl=%2f. Here, you will get a registration form. You have to Username, Password, and Verification code. And after clicking the enter button, you can access  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 ‘Log in 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 of the Technology Upgradation Fund Scheme correctly.