The government said on Thursday the textile industry would get Rs 2,546 crore (Rs 25.46 billion) as subsidy under the Technology Upgradation Fund Scheme within three days, which will help the capital-starved industry clear its dues remaining up to June 30, 2009.
Announcing the release of funds, Textiles Minister Dayanidhi Maran said: "For the first time, the ministry is releasing such a huge amount at one go so that the industry, which has been suffering from huge capital crunch due to adverse economic conditions, can recover. We have also made the process faster and simpler by electronic transmission of funds which will facilitate transfer of money to financial institutions in 72 hours."
Under the scheme, the government provides 5 per cent subsidy to industries for modernisation and installation of new upgraded machinery. The fund would be transferred electronically to more than 121 financial institutions and will help 12,514 beneficiaries.
Maran also said he would approach Prime Minister Manmohan Singh and Finance Minister Pranab Mukherjee for more funds to the textile sector.
The Union Budget had increased the allocation for TUFS from Rs 1,090 crore (Rs 10.9 billion) to Rs 3,140 crore (Rs 31.4 billion). The ministry will release around 81 per cent of the funds so that a backlog of around one year could be cleared at one go and increase capital availability for the industry.
"This is a very good step as the textile industry needs such assistance. We need capital urgently and this step will helps mills to procure cotton and increase their production," said Shishir Jaipuriya, deputy chairman of the Confederation of Indian Textile Industry.
"The release of this subsidy under TUFS is indeed significant and would greatly help the Indian textile industry at a time when industry is finding it difficult to procure credit for its working capital needs,"said Harsh Pati Singhania, president of the Federation of Indian Chambers of Commerce and Industry.
The minister also announced the constitution of a 41-member working group under Textile Secretary Rita Menon to formulate a National Fibre Policy, aimed at having a simplified and level playing trade conditions for all sections of the textile sector.
"The policy will be announced by the year-end and the group will submit its report in the next three months," added Maran.
