The Textile Ministry has suspended the sanction of loans under the technology up gradation fund (TUF) scheme.

According to a circular issued by the office of the Textile Commissioner, all agencies and banks are to suspend the sanction of fresh loans under the TUF. This is mainly due to a fund crunch as the Finance Ministry has been unable to process requests for additional funds made by the Textile Ministry. 

The industry considers this move as a major setback as it comes at a time when the industry is heavily banking on capacity expansion and technology up gradation to meet global competition. Industry bodies like the Tirupur exporters’ association (TEA) and Confederation of Indian Textile industry (CITI) expressed disappointment over the circular.

The TUF scheme which was launched by the government in 1999 provides a 5% interest subsidy for modernization and expansion across the textile value chain, with a repayment period of 10 years. The government had set up a corpus of Rs 25,000 crore for the fund.