COIMBATORE: Textile manufacturers want the new Capital Support Scheme (CSS) announced by the Union Government in the 2026-27 Budget to be a credit-linked subsidy for machinery purchase.
The CSS aims to encourage production and employment by offering subsidies to textile companies.
The union government will form a committee comprising experts and representatives from the industrial association to frame guidelines for implementing the Scheme including the modalities for subsidy.
Earlier, the union government had been implementing the Technology Upgradation Fund Scheme since 1999, to provide credit-linked Capital Investment Subsidies (CIS) to modernise manufacturing, specifically for textiles, garments, and technical textiles. Under the scheme, 15% subsidy was provided, with caps of Rs 30 crore for garment and technical textiles and Rs 20 cr for other sectors to purchase machinery. But, the scheme lasted till 2022.
Industrialists claimed that there is also a backlog of over Rs 8,000 cr that need to be provided as subsidy to industries that had applied under the scheme. With a view to support capital investment support, industrialists from textile sector from Coimbatore had urged the government to bring a new scheme for providing capital-based subsidy to industries.
"Over Rs 4,00,000 cr of investment on machinery was made and Rs 35,000 cr subsidy was earmarked by the union government under the TUFS (Technology Upgradation Fund Scheme) from 1999 to 2022. It boosted modernisation through machinery purchase. High interest rate and long payback period are the challenges faced by industries for purchasing modern machinery. Based on our demands, the union government has come up with the CSS in the Budget but it may consider providing subsidy based on production or employment," said an textile manufacturer in Coimbatore.
"We would press for credit-linked subsidy for machinery purchase during the panel meet to frame guidelines for the scheme," he added.
"If the subsidy is provided to textile engineering manufacturers, it would more competitive and subsequently textile industries would purchase machinery at a competitive price in the market. It would benefit much better than the production-linked or employee-linked capital subsidy," he added.