Textile Ministry set to see substantial jump in fund allocation

The textile ministry although has in recent months cleared some of the old claims yet a chuck of claims are to be cleared for which the ministry is already seeking funds to settle both old and new claims under the latest and the previous avatars of the Technology Upgradation Fund Scheme (TUFS) as well as to cater to claims of refunds under the new duty drawback scheme announced as part of a special package for the garments industry in June, sources said.

The textile ministry has sought R1,750 crore from the finance ministry to settle claims of refunds under the new duty drawback scheme, the sources added.

Apart of this the textile ministry will likely see a substantial jump in fund allocation for it in the coming Budget as the government steps up focus on labour-intensive sectors.

In the Budget for 2016-17, the textile ministry was allocated R4,595 crore, up from the revised estimate of R4,326 crore in the previous fiscal. The annual rise in budgetary allocation for the textile ministry has been marginal in recent years. In 2013-14, the ministry, in fact, witnessed a cut in allocation from a year before.

Last year, the ministry was even pulled up by a parliamentary standing committee for slow spending in recent years, though the panel noted that the ministry, of late, had improved its pace of expenditure. The textile and the garment sector assumes importance as it employs close to 32 million people, having become the largest employer after agriculture.

Last year, the industry had made representations to the ministry, saying TUFS claims worth R3,000 crore were pending for more than three years against investments made during the so-called blackout period (June 20, 2010 to April 27, 2011) as well as errors in reporting of the dole-out amount by banks to the textile commissioner. Government officials this year said textile mills, which had sought subsidy against investments made under the TUFS during the blackout period, won’t be provided any such support. Such subsidy claims are to the tune of R1,000-1,200 crore, according to an industry estimate.

The blackout period refers to the time when the government had stopped fresh sanctions of projects under the TUFS, seeking to change the contours of the scheme from an open-ended scheme to a closed-ended one, and launched the revised scheme only from April 2011.

The CCEA last year decided to introduce the Amended Technology Upgradation Fund Scheme (ATUFS) and approved R12,671 crore for its “committed liabilities” under the old scheme. It provided another R5,151 crore for subsidy payment under the new scheme (ATUFS) over a period of seven years, much less than the allocation seen in recent years.

However, the allocation of a total of R17,822 crore, approved in December last year by the Cabinet Committee on Economic Affairs (CCEA) for subsidy payments under both the old and the new schemes, also didn’t make any provision for such claims.