Know All About Technology Upgradation Fund Scheme (TUFS): Modernizing Indian MSMEs

Mrunal

Sep 30, 2023 — 5 min read

As India strives to establish itself as the fifth-largest economy in the world, the significance of Micro, Small, and Medium Enterprises (MSMEs) continues to grow. In India, MSMEs form the strong backbone of the economy. However, to remain competitive in this fast-paced world, MSMEs need to level up themselves as technologically upgraded by embracing modernization.

This is when the Government of India steps up to introduce the Technology Upgradation Fund Scheme (TUFS) which aims to modernize Indian MSMEs and keep them updated.

In this article, you will discover everything about TUFS and how it strives to empower MSMEs in India. Let’s begin.

Technology Upgradation Fund Scheme- Paving the Path for Modernization

Launched in the year 1999 by the Government of India, TUFS is a financial aid program that aims to promote technological upgradation and modernization in the textile and jute industries. The scheme provides capital subsidies and interest subsidies to encourage MSMEs in these sectors to adopt modern technologies and enhance their competitive edge.

Let us know more about the brief history of TUFS to drive further towards its features, objectives, benefits, eligibility, and more.

Brief History of TUFS

The Technology Upgradation Fund Scheme was launched by the Ministry of Textiles, Government of India. It was further amended, however, the overall motto remained to upgrade the textile mills. With a rapidly digitalizing country, all sectors of the economy need to be time and technology-tested to leap for long-term growth and endurance.
Under the 12th plan, TUFS allocated Rs. 11,952 crore, aiming to attract investments of Rs. 1,51,000 crore from 2012 to 2017. This included Rs. 9,290 crore for existing commitments and Rs. 2,662 crore for new investments, with changes designed to enhance the Ease of Doing Business.

Key Features of TUFS

Capital Subsidy: Under this scheme, eligible MSMEs receive a capital subsidy to invest in modern machinery and equipment. This subsidy aims to offer a 15% subsidy for the textile sector and 10% for other sectors to upgrade technology and machinery.
Highlights Sustainability: TUFS emphasizes sustainability and eco-friendly technology upgrades that will wholeheartedly encourage the usage of renewable energy resources in the textile industry.
Diverse Sector Coverage: Not just the textile industry but the scheme extends its scope to other sectors such as jute, handloom, silk, and wool.
Modernizing Existing Units: The TUFS Scheme modernizes existing units by upgrading their facilities.
Particular Emphasis On Small And Medium-sized Enterprises: Small and medium-sized enterprises benefit a lot by receiving a higher 25% subsidy for specific segments.
Industry Engagement: Beneficiary units are cheered up to take an active role with a minimum contribution expected from their end.

Benefits Of The TUFS Schemes

Enhanced Energy Efficiency: One of the most remarkable merits of this scheme for small-scale enterprises is increased energy efficiency. The cost of energy, which comprises most of the essential modules of the cost structure of the manufacturing activities for MSMEs, can be substantially reduced by this scheme.
Adopting Renewable Resources: Today, a significant portion of our energy comes from fossil fuels, which contribute to rising global temperatures and the depletion of essential resources. So, various initiatives introduced by Govt. of India encourage MSMEs to go for green tech solutions.
Reduced Production Cost: Turning to modern technology is not an expenditure but a long-term investment that promises to pay well. MSMEs can reduce production costs substantially by embracing efficient technology and optimizing their operations.

Main Objectives Of The Scheme

The Technology Upgradation Fund Scheme in India has several key objectives aimed at promoting technology adoption and modernization in the textile and jute industry. Here are some of its main targets:

Enhance Global Competitiveness: TUFS aims to make the Indian textile and jute industry globally competitive by facilitating the adoption of modern and efficient technologies.
Improve Product Quality: The scheme seeks to enhance the quality of textile and jute products through technological upgradation, making them more competitive in domestic and international markets.
Boost Productivity: This intends to increase productivity within the industry by promoting the use of advanced machinery and processes, leading to higher output with the same or diminished resources.
Generate Employment: By encouraging technology upgradation, the scheme aims to create additional employment opportunities in the textile and jute sectors, contributing to economic growth and reducing unemployment.
Promote Sustainable Practices: TUFS encourages the adoption of eco-friendly and energy-efficient technologies, thereby supporting sustainability and reducing the environmental footprint of the industry.
Attract Investment: The scheme aims to attract domestic and foreign investments by making the textile and jute industry an attractive destination for capital infusion.
Reduce Import Dependency: By upgrading technology, TUFS aims to reduce the dependency on imported machinery and equipment, thereby saving foreign exchange.
Modernized Infrastructure: The scheme supports the modernization of infrastructure in the textile and jute industries, making it more efficient and competitive.
Enhance Skill Development: TUFS promotes skill development within the industry to ensure that the workforce is trained in the use of advanced technologies.
Foster Innovation: The scheme encourages innovation, research, and development, driving technological advancements within the textile and jute sectors.

How To Apply For This Scheme

Are you an Indian MSME owner uncertain about which government scheme best suits your needs? OOr are you a startup owner perplexed about funding, machinery, asset management, and more? No worries; Acehours, your personal business consultant and guide, is here to support you.

With a profound grasp of the scheme's intricacies, Acehours is dedicated to simplifying the process for your business venture. We aim to offer you tailored guidance, helping businesses harness this government initiative to bolster technology upgradation, enhance productivity, and remain globally competitive.

Acehours' expert consultants ensure that MSMEs can tap into TUFS's benefits efficiently. This enables them to modernize their operations, reduce production costs, and adapt to energy-efficient technologies for sustainable growth in the textile and jute industry.

Firstly, let's delve into the eligibility criteria for applying to TUFS:

To avail of benefits from this Scheme, only entities or units formally registered with the Registrar of Companies or the appropriate State Government Department are eligible. Primarily, this scheme benefits the jute and textile industries. Furthermore, the subsequent entities qualify:

Silk Sector
Handloom sector
Technical textiles
Jute sector
Made-up/garment manufacturing
Processing fabrics, fibers, garments, made-up, and yarns
Weaving preparatory, weaving, and knitting

What is the subsidy rate for the ATUFS Scheme?

Sr.NO.	Segments	Rate of capital investment subsidy(CIS)	CIS per individual entity
1.	Garments, Technical Textile	15% on eligible Machine	Rs. 30 cr
2.	Weaving for brand new shuttle-less Looms ( including weaving preparatory and knitting), Processing jute, silk, and handloom.	10% on eligible Machine	Rs. 20 cr
3.	Composite units/ multiple segments- if total capital investment is more than the 50% eligible project cost.	15% on eligible Machine	Rs. 30 cr
4.	Composite units/ multiple segments- if total capital investment is less than 50% of eligible project cost.	10% on eligible Machines	Rs. 20 cr

Typically, applications for TUFS are submitted through the designated financial institutions or banks. Check with the relevant financial institution that is currently authorized to accept TUFS applications.

Application for the Amended TUFS subsidy can be made through the iTUFS online portal, which has been introduced by the Ministry of Textiles. This online system is designed to enhance transparency throughout the subsidy claim process.
To apply for the Amended TUFS subsidy, individuals or businesses can submit their application through the iTUFS online portal.
Upon submission of the online application, it undergoes verification by various stakeholders, including the Ministry of Textile, Textile Commissioner Office, banks, and other pertinent authorities.
After receiving approvals from these different stakeholders, the Ministry of Textiles proceeds to release the subsidy funds.
Once the application process is initiated, a Unique Identification Number (UID) is issued to the applicant, enabling them to track the progress of their application online and receive regular updates via SMS or email.

For a seamless registration experience with the Technology Upgradation Fund Scheme, consult the business experts at Acehours. We assist in understanding eligibility criteria, preparing detailed project proposals, and securing the necessary financing.

Acehours' seasoned consultants ensure businesses efficiently harness the benefits of TUFS, promoting technology upgradation, improved productivity, and competitiveness in the textile and jute sectors. So, what are you waiting for?