The Government is planning a major revamp of its flagship incentive scheme for capital investments in the textile and garment sector to improve its performance and align its objectives with other recently launched programmes, including the production-linked incentive (PLI) scheme and mega parks.
A leading business daily, instead of merely extending the Amended Technology Upgradation Fund Scheme (ATUFS) with the same structure, the Government has decided to revamp it.
As per the report, the new scheme that is being worked out will focus on expeditious subsidy disbursement for large investments and better incentivise segments that have high employment potential.
The new scheme will likely be designed to help the fragmented textile and garment industry acquire scale and boost exports, and complement the PLI and the mega textile park schemes.
It would also facilitate the upgrade of existing looms to better-technology ones, ensure quality in processing and curb fabric imports by garment firms.
ATUFS is one of the main schemes for Indian textile industry and industry is also seeing some improvement in near future.
Few months back, a stakeholders’ consultation on reducing compliance burden in ATUFS, in-line with Government’s commitment towards ease of doing business took place. The industry had also appealed for extension of this scheme beyond 31 March 2022 for 5 more years.
The thrust on technical textiles and MMF products could be raised, in sync with the recently launched Rs. 10,683-crore PLI scheme for these segments.
While subsidy up to Rs. 5 crore is currently cleared within a short period (a week, in most cases), anything above this amount for big-ticket investments typically takes much longer. This process is expected to be expedited.
While notifying the ATUFS in January 2016, the Government had set aside an outlay of Rs. 17,822 crore (Rs. 12,671 crore for clearing pending claims under the scheme’s earlier avatars and Rs. 5,151 crore for implementing the ATUFS) until FY22.
The scheme is supposed to mobilise fresh investments of about Rs. 95,000 crore in the textile and apparel sector by FY22 and create 3.5 million new jobs.
However, until FY21, it could incentivise projects worth only Rs. 46,861 crore, while the subsidy disbursement stood at Rs. 3,378 crore.
Under the extant scheme (ATUFS), garments and technical textiles firms are provided a 15 per cent subsidy on capital investments, subject to a ceiling of Rs. 30 crore for each investor. Remaining segments, such as weaving, processing, jute, silk and handlooms, get 10 per cent, with a cap of Rs. 20 crore.
