Fund scheme for textile and Jute industries-TUF Scheme

Fund scheme for textile and Jute industries-TUF Scheme

Technology Upgradation Fund Scheme

The Government of India (GoI), Ministry of Textiles (MoT), introduced Technology Upgradation Fund Scheme (TUFS) for Textile and Jute Industries on April 1, 1999, for a period of 5 years, subsequently extended by 3 years to cover sanctions up to March 31, 2007. The Scheme has been modified w.e.f. April 1, 2007, for a period of 5 years i.e. to last till FY 2011-12. However, the Scheme was discontinued from June 29, 2010 till April 27, 2011 and loans sanctioned during the said period to the textile units were not covered under the Scheme. The Scheme was re-launched w.e.f. April 28, 2011 as Restructured-TUFS (i.e. R-TUFS) initially for the period upto March 31, 2012, which was further, continued till March 31, 2013. Taking note that the scheme in its R-TUFS form was extended for the first year of the 12th plan i.e. upto 31.03.2013, GoI continued the TUFS as Revised Restructured Technology Upgradation Fund Scheme (RR-TUFS) w.e.f April 1, 2013 to March 31, 2017. RR-TUFS is introduced with an overall plan allocation of Rs. 11952.80 crore including the committed liabilities of spinning sector of erstwhile/ M-TUFS, RTUFS and fresh sanction in the 12th plan period.

  • A pilot project of technology upgradation of power loom sector by way of hire purchase scheme with an overall outlay of Rs. 300 crore will be implemented

  • 10% of the approved outlay for new sanction will be earmarked for MSME

  • 3. In case of stand-alone spinning sector, a volume cap of Rs. 250 crore shall apply on project cost for new sanction for individual spinning units.

Revised Restructure Technology Upgradation Fund Scheme (RR_TUFS) features

  • A reimbursement of 5% on the interest charged by the lending agency on a project of technology upgradation in conformity with the Scheme. However, for spinning machinery the Scheme will provide 2% for new stand alone / replacement / modernisation of spinning machinery; and 5% for spinning units with matching capacity in weaving / knitting / processing / garmenting.

  • In weaving - (i) 6% Interest Reimbursement (IR) and 15% Capital Subsidy (CS) on brand new shuttleless looms or 30% Margin Money Subsidy (MMS) for powerloom 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- capital ceiling of Rs. 5 crore and subsidy capp of Rs. 1.5 crore would be adhered to encourage adequate investment by MSME sector.

  • Cover for foreign exchange rate fluctuation / forward cover premium not exceeding 5% for all segments except for new stand alone / replacement / modernisation 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 ( 2% Interest Reimbursement for stand Alone spinning machinery ) on investment in TUF compatible specified machinery subject ceiling on margin money subsidy of Rs. 75 lakh. A minimum of 15% equity contribution from beneficiaries will be ensured.

  • 5% interest reimbursement plus 10% capital subsidy for specified processing, garmenting and technical textile machinery.

  • Interest subsidy / capital subsidy / Margin Money subsidy on the basic value of the machineries excluding the tax component for the purpose of valuation.

  • 30% capital subsidy in lieu of 5% interest reimbursement on benchmarked machinery of silk sector as applicable for Handloom sector.

  • The Scheme will cover only automatic shuttle less looms of 10 years vintage and with a residual life of minimum 10 years.

  • Investments like factory building, pre-operative expenses and margin money for working capital will be eligible for benefit of reimbursement under the Scheme meant for apparel sector and handloom with 50% cap. In case apparel unit / handloom unit is engaged in any other activity, the eligible investment under this head will only be related to plant & machinery eligible for manufacturing of apparel / handlooms.

  • Interest reimbursement will be for a period of 7 years including 2 years implementation / moratorium period.

  • The subsidy in restructured cases will be restricted to the quantum approved in the initial loan repayment schedule by the lending agency to the Office of the Textile Commissioner.

  • Common Effluent Treatment Plant (CETP) and other investments like, energy saving devices, in-house R&D, IT including ERP, TQM including adoption of ISO / BIS standards, CPP and electrical installations etc. will not be eligible under RR- TUFS.

Please write to us at for any queries on TUFS. You may also access the complete scheme on the official website of Textile Commissioner i.e.