The Government of India (GOI), Ministry of Textiles (MOT), introduced Technology Upgrdation Fund Scheme (TUFS) for Textile and Jute Industries on April 1, 1999, for a period of 5 years, subsequently extended by 3 years to cover sanctions up to March 31, 2007. The Budget for FY 2007-08 has announced further extension of the Scheme by five years i.e to last til, FY 2011-12. Post-extension, the Scheme is under revision and sanctions w.e.f April 1, 2007, have been kept in abeyance under TUFS.
The Scheme is intended to facililate induction of state-of-the-art or near state-of-the-art technology. Existing units with or without expansion and new units are eligible under TUFS.
IDBI is the Principal Nodal Agency for Textile Industry (Non –SSI Sector). Normally, the projects would be evaluated as per project finance norms. The rate of interest changed is the normal applicable rate as prevailing at the time of sanction/execution of loan documents. However, GoI, MoT, gives interest reimbursement of 5% p.a on Rupee Term Loans to eligible projects sanctioned assistance under TUFS. As regards Foreign Currency Loans, GoI, MoT, provides a cover for actual adverse exchange fluctuations not exceeding 5% from the base rate (base rate being the weighted average rate covering all disbursements of the loan) or cost of forward cover premium limited to 5% p.a on the base rate of exchange, as an option, to be exercised by the borrower company once in each financial year.