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Textile sector yet to receive stimulus package funds
Sapna Dogra Singh in New Delhi | January 08, 2009 09:13 IST
Last Updated: January 08, 2009 09:46 IST
The textile industry is yet to receive the Rs 1,400 crore (Rs 14 billion) promised in last month's stimulus package to clear the backlog of reimbursements under the Technology Upgradation Fund Scheme.
The industry, which has complained of widespread job losses along with a sharp decline of about 30 per cent in its expected export target for the current fiscal, wants a quick action from the government.
Industry sources say that even if the government releases the funds, the banks would take another month to disburse them.
According to a senior textile ministry official, the money would be released within a few days.
"Within a week's time, the ministry will issue cheques to banks," said the official, adding that there were last-minute procedural formalities to be done before releasing the money.
Tufs, which was launched in 1999 and modified in 2007, provides 5 per cent interest reimbursement plus 10 per cent capital subsidy for machinery required in manufacturing technical textiles as well as garments. Similar benefits are provided for the specified processing machinery.
There is no cap on funding under the scheme.
In November, the ministry released Rs 300 crore (Rs 3 billion) to clear the backlog till December 2007.
"It is like denying oxygen to a dying patient," said DK Nair, secretary general, Confederation of Indian Textile Industry.
The allocation of Rs 1,400 crore for Tufs has been pending for year-and-a-half, which the government was obliged to give.
Therefore, it was not an incentive 'package', Nair said.
This delay is not helping the industry, which is going through a rough patch due to the ongoing global economic crisis, claim company officials.
Take, for instance, the Coimbatore-based KPR Mill, an integrated mill that has an outstanding amount of Rs 30 crore (Rs 300 million) under Tufs."We don't know when we would get the amount and how much," said P Nataraj, managing director of the company, adding the money would help ease the liquidity situation.
Abhishek Industries [Get Quote] is another leading textiles company in the country that has an outstanding of about Rs 20 crore (Rs 200 million) under Tufs.
According to Rajeev Gupta, chief executive of the company, "Cash is the most important thing in these times and we don't know when would we receive these funds." He is hopeful of getting the money in a month's time.
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