Maharashtra has emerged as the most attractive destination for new investments in textile sector compared to other peer states in India. The state offers dual advantages under Maharashtra Textile Policy (MTP) and centrally sponsored TUFS (Technological Upgradation Fund Scheme) to investors which reduce the project cost substantially. Under the under Maharashtra Textile Policy, new investments can get 10% capital subsidy as well as interest subsidy while expansion projects can get interest subsidy from the state government in addition to the TUFS benefits.
This year, after the rupee’s fall against the US$ and Euro, investment in textile sector has been hit hard and many investors have delayed the projects due to increased cost. Indian textile industry depends substantially on imported machinery and technology which became costly after the rupee’s weakness against Euro and US Dollar. To add to the woes of investors, TUF Scheme, which was continued for the 12th five year plan period during this year’s budget announcement by the Finance Ministry, was on hold till August end for cabinet committee approval.
TUFS has been the most successful government scheme that stimulated investments in textile industry in the country that offers benefits like interest subsidy and capital subsidy to investors. However, at elevated cost of Euro and US Dollar, investors may not come forward as expected. While talking to Textile Excellence, Prashant Mandke, Head Marketing at Batliboi Ltd said “TUFS is an investment stimulator but with the increased cost of project due to weak Rupee and instability of the currency investors are not coming forward. Indian textile companies relay substantially on imported machinery. The project cost escalation due to currency fluctuations is not proportional to the benefits available under TUFS.”
However, as TUFS is opened up now and investors in Maharashtra can avail duel benefit, the state is comparatively better positioned than other states, he said. “Therefore, projects which were delayed in the state to gain momentum as industry friendly atmosphere is created and new investors would come forward considering better benefits in the state.” Mandke said.