The subsidy claims made by textile mills for investments made under the Technology Upgradation Fund Scheme (TUFS) during the black-out period (from June 28, 2010, to April 27, 2011) have been rejected by the Indian Government.
Claims worth approx. Rs. 1,000 to Rs. 1,200 crore were made during the black-out period, which was referred to as the period when no fresh projects were being sanctioned under TUFS, as the scheme was being converted into a close-ended one. The recent allocation of Rs. 17,822 crore, approved by the Cabinet Committee on Economic Affairs (CCEA), for subsidy payments under the old as well as new schemes did not have any provision for such claims either.
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The decision of not considering the black-out period cases would further pressurize the Indian textile mills that have taken loans to fund expansion or upgrade. The textile mills affected expressed distress and argued that the scheme could not be halted in between without a formal notification from the Government. However, the then Finance Ministry argued that the textile mills knew about the decision of the Government and that they were not entitled to subsidy.
Introduced in 1999, TUFS was aimed at making funds available to the textile industry for upgrading technology at existing units as well as help them setting up new units with state-of-the-art facilities to improve their competitiveness in the domestic and global markets.
