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India : Textile Funds Bring Little Cheer to Small Units |
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2003-8-22
The technology upgradation fund scheme (TUFS) has found few takers in the powerloom industry. More than 90 per cent of the powerloom units accessed funds from sources other than banks, despite the subsidy available to them under TUFS, according to data available from the office of the textile commissioner,
Mumbai till March 31, 2003.
Most of the small units in the decentralised powerloom sector failed to access TUF funds owing to absence of books of accounts. Many powerloom units work on job basis and do not maintain books of accounts, making them unfit for bank loans.
In addition, most banks require a minimum project size under TUFS to be Rs 25 lakh, while SIDBI’s minimum requirement was Rs 10 lakh. The average powerloom unit has 4.5 units, with machinery worth about Rs 2.5-3 lakh. Banks consider these to be unviable as they have less than 8-10 shuttleless looms.
Banks also refused working capital loans through project feasibility appraisal required assessment of working capital availability. Since many small units could not show working capital, proposals were turned down.
Loans for margin money requirement from national equity fund scheme (NEFS) also failed because SIDBI insisted on refinance. But the banks refused refinance and did not entertain NEFS loan applications.
Total looms eligible under TUFS route were 9.58 per cent or 2312 out of a total of 24141 looms. The balance 90.42 per cent or 21829 looms were ineligible under TUFS, according to the textile commissioner’s office.
There were 405 semi-automatic looms under TUFS category as compared to 15072 looms outside TUFS. In automatic looms, only 554 looms were under TUFS and 2592 outside TUFS. In the shuttle-less loom category, about 1353 looms were under TUFS and 21829 looms outside it.
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