Technology Upgradation Fund Scheme (TUFS) – A Comprehensive Guide

Introduction

The Technology Upgradation Fund Scheme (TUFS) is a flagship initiative by the Government of India aimed at supporting the modernization and technology advancement of the textile and jute industries. The scheme was launched in 1999 by the Ministry of Textiles to enhance productivity, competitiveness, and cost-effectiveness in the textile sector by providing financial assistance for upgrading machinery and technology.

TUFS has undergone several revisions over the years, with the latest version being the Amended Technology Upgradation Fund Scheme (ATUFS) introduced in 2016, which focuses on capital investment subsidies.

Objectives of the TUFS Scheme

The Technology Upgradation Fund Scheme aims to:

• Promote modernization of the textile industry by upgrading technology.
• Enhance productivity and efficiency in textile manufacturing.
• Reduce production costs by enabling access to modern machinery.
• Encourage investments in the textile and jute sectors.
• Generate employment opportunities in the textile industry.
• Promote sustainable manufacturing practices and eco-friendly production.

Key Features of TUFS

• Financial Assistance: The scheme provides capital subsidy and interest reimbursement to textile units for purchasing new machinery.
• Coverage of Various Sectors: Includes spinning, weaving, knitting, processing, garmenting, jute, silk, technical textiles, and power looms.
• Reimbursement of Interest & Capital Subsidy: Businesses can avail themselves of a subsidy ranging from 10% to 30% depending on the sector and type of investment.
• Support for Green Technology: TUFS encourages investments in energy-efficient and environment-friendly machinery.

Evolution of TUFS

TUFS has been revised multiple times to improve its effectiveness:

Financial Support Under ATUFS

The Amended Technology Upgradation Fund Scheme (ATUFS), which is the current version, provides capital investment subsidies to different segments of the textile industry.

Subsidy Rates Under ATUFS

Key Financial Benefits

• Reduction in interest rates on term loans.
• Direct subsidy on capital investment in modern machinery.
• Support for MSME and large textile enterprises.
• Enhanced competitiveness of Indian textile firms in global markets.

Eligibility Criteria for TUFS

To avail the benefits of the Technology Upgradation Fund Scheme, businesses must meet certain eligibility conditions:

1. Eligible Sectors

• Spinning, weaving, processing, knitting, and garmenting units.
• Jute, silk, and technical textile manufacturers.
• Power loom units and composite mills.

2. Business Requirements

• The applicant must be a registered MSME or textile enterprise.
• The unit must be operational and compliant with GST regulations.
• The machinery purchased should be new and not second-hand.
• Only loans sanctioned from scheduled commercial banks and approved financial institutions are eligible.

3. Financial Requirements

• The project must involve investment in technology upgradation.
• Loans should be availed only from recognized lenders.
• Applicants must submit detailed project reports, business plans, and financial projections.

How to Apply for TUFS?

Applying for TUFS involves several steps, from business registration to subsidy disbursal.

Step-by-Step Application Process

1. Business Registration

   • The company must be registered under the Ministry of Textiles.
   • Obtain a Unique Identification Number (UIN) from the government’s online portal.

2. Loan Application

   • Apply for a term loan from a scheduled commercial bank or NBFC.
   • Submit project details, cost estimation, and technology upgradation plans.

3. Submission of Application

   • Fill out the TUFS application form online via the official i-TUFS portal.
   • Attach required documents like GST registration, financial statements, and machine purchase invoices.

4. Approval & Loan Disbursal

   • The government reviews the application and approves capital subsidy or interest reimbursement.
   • Approved funds are credited directly to the applicant’s bank account.

5. Claiming Subsidy

   • Submit a subsidy claim with bank loan documents and machinery invoices.
   • Government verifies the claim and disburses the subsidy.

Documents Required for TUFS Application

To apply for TUFS, businesses must provide:
✅ Business Registration Certificate
✅ Udyam Registration (for MSMEs)
✅ GST Registration Certificate
✅ Bank Loan Sanction Letter
✅ Machinery Purchase Invoices & Quotations
✅ Financial Statements (Balance Sheet, IT Returns, etc.)
✅ Project Report on Technology Upgradation

Benefits of TUFS

• Reduces Loan Burden: Interest and capital subsidies make loans more affordable.
• Encourages Modernization: Textile units can upgrade to automated, efficient machinery.
• Boosts Competitiveness: Helps Indian textile firms compete in global markets.
• Promotes Green Manufacturing: Encourages energy-efficient and eco-friendly technology.
• Increases Employment Opportunities: New investments create jobs in textile clusters.

Challenges Faced in TUFS Implementation

1. Delays in Fund Disbursal: Some businesses face delays in receiving subsidy payments.
2. Limited Awareness: Many MSMEs are unaware of the application process.
3. Bank Cooperation Issues: Some banks are hesitant to process TUFS loans.
4. Bureaucratic Procedures: Documentation requirements can be complex for small enterprises.

Success Stories

1. Garment Manufacturer in Tamil Nadu: Upgraded machinery under TUFS, increasing production by 40%.
2. Weaving Unit in Gujarat: Received a ₹10 crore capital subsidy, reducing loan costs significantly.
3. Technical Textile Firm in Maharashtra: Used 15% subsidy to install eco-friendly fabric processing equipment.

Comparison of TUFS with Other Textile Sector Schemes

Conclusion

The Technology Upgradation Fund Scheme (TUFS) is one of India’s most impactful schemes for promoting modernization and competitiveness in the textile industry. By offering capital subsidies and interest benefits, the scheme encourages textile businesses to invest in cutting-edge technology and enhance production efficiency.

Key Takeaways

✅ Subsidy up to ₹30 crore per textile unit
✅ Supports technology modernization in textiles, jute, and technical fabrics
✅ Encourages automation, green technology, and efficiency
✅ Available for MSMEs and large textile enterprises
✅ Boosts India’s textile exports and global competitiveness

For more information and to apply, visit the Ministry of Textiles Website.

Read about Interest Subvention Scheme for MSMEs - here

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