Indian government will provide a maximum subsidy of Rupees 1,972 crores ($438m) to attract an investment of approximately $10.42bn across the textiles value-chain.

In a communiqué from the Ministry of Textiles dated May 1, India announced the restructuring of the popular Technology Upgradation Fund Schemes (TUFS) to boost the investments in the textiles sector. All segments within the textiles industry are expected to benefit from the scheme. The scheme will provide a maximum subsidy across the textiles supply chain from spinning, power loom, garmenting, processing and technical textiles for the period, April 28, 2011 to March 31, 2012. The subsidy will have a cap of Rupees 1,972 crores ($438m).

The objective of the restructured scheme is to leverage investments in the textiles sector by having a balanced growth across the value chain, says the government announcement.

Spinning units with matching capacity in upward processing are eligible for 5% interest reimbursement, while stand-alone spinning upgradation projects are eligible for 4% interest reimbursement. Value-addition sectors such as power looms, garmenting, processing and technical textiles are in for additional benefits.

The government will provide 10% capital subsidy and 5% interest reimbursement on projects involving new shuttleless looms. Processing, garmenting and technical textiles sectors can get 10% capital subsidy and 5% interest rebate on specified machinery.

The interest reimbursement will be for a maximum period of seven years. The investment of Rupees 1,972 crores ($438m) in the subsidy form is expected to result in an overall investment of Rupees 46,900 crores ($10.42bn) across the value chain in the Indian textiles sector.