Mumbai: The government has modified the Technology Upgradation Fund Scheme (TUFS) for textile industry to make available among other things protection against foreign exchange fluctuations, minister of state for textiles EVKS Elangovan informed the Rajya Sabha today.

The scheme provides interest reimbursement on spinning machinery at the rate of 4 per cent. However, all the remaining sub-sectors covered under the scheme would get interest reimbursement at the rate of 5 per cent, he said.

TUFS also provides cover for foreign exchange rate fluctuation not exceeding 5 per cent. However, for the spinning machinery the coverage is 4 per cent.

Powerloom units have an additional option to avail of 20 per cent margin money subsidy under TUFS in lieu of 5 per cent interest reimbursement on investment in TUF compatible specified machinery subject to a capital ceiling of Rs2 crore and ceiling on subsidy Rs20 lakh.

The scheme provides 15 per cent margin money subsidy for SSI textile and jute sector in lieu of 5 per cent interest reimbursement on investment in TUF-compatible specified machinery subject to a capital ceiling of Rs2 crore and ceiling on subsidy Rs15 lakh.

Specified processing machinery, garmenting machinery and machinery required in manufacture of technical textiles will get a 5 per cent interest reimbursement plus 10 per cent capital subsidy.

The scheme provides for 25 per cent capital subsidy on purchase of the new machinery and equipment for the pre-loom and post-loom operations, handlooms/upgradation of handlooms and testing and quality control equipment, for handloom production units.

Meanwhile, the high level committee on manufacturing (HLCM) headed by the prime minister is considering fiscal proposals required for improving the competitiveness of the textiles sector.

The committee, in consultation with the ministry of textiles, the National Manufacturing Competitiveness Council (NMCC) and the finance ministry, is considering an action plan for the growth of textile industry, the minister told the Rajya Sabha.

The government had announced a set of measures in July 2007 to provide relief to exporters by way of accelerated reimbursement of dues, reduction in the interest rate on pre-shipment and post-shipment credit and revision in drawback rates and Duty Entitlement Passbook (DEPB) rates. In addition, the government has also notified exemption of certain service tax in respect of exporters, the minister added.

The government had, in November, also announced a relief package reducing basic customs duty on certain items relating to textile sector. Refund of service tax paid by exporters on taxable services linked to exports has been further extended. A support package for providing relief to export sectors, like textiles, which have low import intensity, was also announced through additional subvention of 2 per cent in pre-shipment and post-shipment credit to the textiles including ready-made garments and carpets but excluding man-made fibre.

The government has taken new initiatives, including creation of investment regions to consolidate the agglomeration to further reduce transaction costs and enhance competitiveness, launching of manpower development scheme - known as the ''''Neighbourhood Apparel & Textile Training Institutes for Job Assurance (NATIJA)'''' - for establishing a network of employment-linked training facilities to meet the projected demand of 4 million trained workers over the next 5 years and schemes to revitalise handloom cooperatives on the pattern of agricultural cooperatives.

Necessary action has since been initiated in consultation with the planning commission and the finance ministry, he said.