DEFINITION OF TECHNOLOGY UPGRADATION

Technology Upgradation would ordinarily mean induction of state of-the-art or near-state-of-the-art technology. But in the widely varying mosaic of technology obtaining in the Indian textile industry, at least a significant step up from the present technology level to a substantially higher one for such trailing segments would be essential. Accordingly, technology levels are bench-marked in terms of specified machinery for each sector of the textile industry. Machinery with technology levels lower than that specified will not be permitted for funding under the TUFS Scheme.

ELIGIBLE MACHINERY

Installation of the following types of machinery in a new unit or in an existing unit by the way of replacement of existing machinery and / or expansion will be eligible for coverage under TUF scheme:-

2.1	Cotton Ginning and Pressing -	Annexure-A.
2.2	Spinning/Silk Reeling & Twisting/Wool Scouring & Combing/Synthetic filament yarn Texturising, Crimping & Twisting-	Annexure-B.
2.3	Manufacturing of viscose filament yarn-	Annexure-C.
2.4	Weaving/Knitting including non-wovens and Technical Textiles-	Annexure-D(1&2).
2.5	Garment/Made-up manufacturing	Annexure-E.
2.6	Processing of fibre/Yarn/Fabrics/Garments/made-ups	Annexure-F(1-4).
2.7	Jute Industry	Annexure-G.
2.8	Energy saving & process control equipments for various sectors	Annex-H.

GENERAL ELIGIBILITY CONDITIONS

TYPE OF UNITS

(1)	Existing unit with or without expansion and new units.
(2)	Existing units can modernise and / or expand with the state- of-the-art technology.
(3)	New units must set up their entire facilities only with the appropriate eligible technology.
(4)	A unit can undertake one or more activities listed at I-SCOPE OF THE SCHEME hereinbefore under the scheme. However, multiple activities can be undertaken only in an integral manner, i.e., by way of forward or backward integration. It is, however,clarified that weaving /knitting and garment manufacturing or weaving/knitting and processing or garment manufacturing and processing will be considered as integral activities.
(5)	Textile/Jute units with 100% foreign equity.

TYPE OF TEXTILE MACHINERY ELIGIBLE:

(1)	Under the TUF Scheme, generally only new machinery will be permitted
(2)	However, the following imported second hand machinery are also eligible under TUFS;
	a) Auto-coners,airjet looms and waterjets shuttleless looms of upto 5 years vintage and with a residual life of minimum 10 years;
	b) Projectile and Rapier shuttle-less looms with or without high speed direct beam warper with creel and/or sectional warping machine with auto stop and tension control of upto 10 years' vintage and with a residual life of minimum 10 years;
	c) Following worsted sector machinery of upto 10 years' vintage with a residual life of minimum 10 years:-
	i) Worsted card.
	ii) High speed inter-setting/Gill box/Chain gills/Rotary gills/Vertical gill box.
	iii) Drawing set/Roving frame/Rubbing frame for worsted system.
	iv) Ring frames for worsted system.
	v) Rectilinear combers for worsted system.
	vi) Ring frames with siro spinning attachment with or without auto doffers for worsted system. vii) Tow Top Converter.
	d) Machinery for jute industry (i.e. jute softening and carding, drawing, spinning and weaving) with a minimum residual life of 10 years subject to a maximum expired life of 10 years e) Computerised flat bed knitting machine with minimum speed of 10 revolutions per minute and upto 5 years vintage and with a residual life of minimum 10 years. f) The following silk waste tops making machinery of upto 10 years vintage with a residual life of minimum 10 years : Computerized silk waste cutting machine. Carding machine with roller clearer for processing silk waste. High speed Draw frame with Gill box. Rectilinear Comber for silk combing. g) Fabric embroidery machine of upto 10 years vintage and with a residual life of minimum 10 years. h) Warp and Raschel knitting machine of upto 10 years vintage and with a residual life of minimum 10 years. i) Automatic open end spinning machine with a speed of more than 75,000rpm and upto 10 years vintage and with a residual life of minimum 10 years. j) High speed circular knitting machine (minimum speed of 20 revolutions per minute) upto 5 years vintage and with a residual life of minimum 10 years. k) The following machinery for non-woven upto 10 years vintage and with a residual life of minimum 10 years. High speed cards with chute feed double doffer or roller card with chute feed Aerodynamic or card with feeder. Cross lapper. Needle loom with compressive batt feeder and compressing apron. 2 Bowl Thermo bond calender Web laying and web forming (Synchronized) high-speed cards with chute feed. Print bonder
(3)	A certificate certifying the vintage and residual life of the imported second hand machinery must be furnished to the lending agency at the appropriate time as determined by the lending agency. Any of the agencies specified in Appendix-32A of the Handbook of Procedures (Volume 1) of EXIM Policy 1997-2002 (as amended from time to time) can give such a certificate. Such a certificate is compulsory for any import of eligible second hand machinery under this scheme irrespective of the value of such import. A certificate from the Textile Commissioner or Jute Commissioner, as the case may be, will also be necessary to the effect that the equipment is not indigenously available.
(4)	Balancing equipment or equipment required for de-bottlenecking the production process will also be eligible for funding under TUFS.
(5)	Waste reduction equipment or devices will be eligible for funding under the TUFS.
(6)	Eligibility of any other textile machinery equal to or higher than the benchmarked technology not listed in the annexures or developed in the course of the operation of TUFS will be, suo motu or on reference, specifically determined by the Technical Advisory Committee to be constituted by the Government.
(7)	The size of the technologically upgraded facilities of an existing unit or size of the new unit must be of a minimum economic size (MES). Except cotton ring spinning segment, the MES for other eligible segments of the industry should be any unit which is financially viable as per viability analysis of the financial institutions or banks. As regards cotton ring spinning system, ordinarily, 25000 spindles will be the MES. However, for the units having 12,000 or more spindles and with consistently good management and financial performance track record, nodal agencies/PLIs may sanction at their discretion, a technology upgradation project even without topping the spindleage to 25,000, provided post-modernisation, the unit is economically viable. Units with less than 12000 spindles must top it upto a minimum of 12,000 spindles or more, subject to a good management and financial track record and fulfillment of the condition of investment in downstream permissible value addition activities. However, a new unit will be allowed only at a minimum of 25,000 spindles subject to fulfillment of other conditions of TUFS.
(8)	A combination of ring spindles and O.E. Rotors for the MES of 25,000 spindles under TUFS has been permitted. Further, if an existing spinning unit proposed to expand itscapacity, the MES of the unit after expansion should be a minimum of 12,000 spindles including a combination of ring spindles and O.E. Rotors, with a maximum of 5% lower tolerance.
(9)	New Composite units with knitting and garmenting facility are permitted to install equivalent/matching capacityin spinning In such cases, MES for spinning facility will not be applicable. The powerloom units can also set up equivalent capacity of spinning, without applicability of MES for spinning capacity.
3.3	OTHER INVESTMENTS ELIGIBLE:
	(1) The following investments will also be eligible to the extent necessary for the plant and equipment to be installed for Technology Upgradation and the total of such investments will not normally exceed 25% of the total investment in such plant and machinery:   a) Land and factory building including renovation of factory building and electrical installations;   b) Preliminary and pre-operative expenses;   c) Margin money required for working capital, specifically required for the technology upgradation;
	(2) Investments in the installation of the following facilities including necessary equipment:   a) Energy saving devices;   b) Effluent treatment plant (ETP);   c) Water treatment plant for captive industrial use;   d) In-house R.&D. including design studio;   e) Information technology including Enterprise Resource Planning (ERP);   f) Total quality management (TQM) including adoption of appropriate ISO/BIS standards.(Lab versions of machinery approved for commercial production purpose under TUFS are eligible). g) Captive power plant of the units availing of TUFS loan or on stand-alone basis w.e.f. 23.10.2001. The CPP on stand-alone basis will be covered of the units having main plant & machinery in conformity with TUFS norms and eligible for loaning under TUFS. However, investement already made prior to 23.10.2001 on CPP would not be eligible under TUFS. Note : Prior to coverage of CPP on stand alone basis, the investement in CPP was limited to eligible investement in plant and machinery under TUFS. It is clarified that in case of installation of CPP before implementation of technology upgradation of plant & machinery, interest reimbursement will be eligible from tha date of disbursement of loan for CPP provided technology upgradation of plant & machinery is implimented within 1 year of the disbursement of loan for CPP. In case technology upgradation of plant & machinery has been implemented after 1 year of installation of CPP, interest reibursement on CPP will be available retrospectively for a period of one year only. Interest reimbursement will not start until the eligibility therefor is established,i.e., the technology upgradation is actually implemented. Since CPP on stand alone basis is permitted without any restriction of overall investement in eligible P&M, such restriction for CPP along with technology upgradation project also stand removed from 23rd Oct., 2001. However, the investement in CPP may be restricted to lending agencies assessmen of overall present and anticipated future Power requirement of the unit to ensure in house consumption. Cut off date for stand alone CPP is 23rd Oct. 2001 and the date of first disbursement for CPP is to be considered for assessing the eligibility of CPP set up on standalone basis. (h) Husk Fired Boiler on stand-alone basis (without accompanying textile modernisation / expansion) are eligible. (i)   Wind Turbine : However, before reimbursing, the Nodal agency would send the details of the proposal recieved for wind energy plant for captive power generation to Textile Ministry through Textile Commissioner ans seek its approval before releasing the interest reimbursement. 3) Investments in the acquisition of technical know how including expenses on training and payment of fees to the foreign technicians. 4) Lending in excess of the limits prescribed above in respect of the items included in subpara(1) of this para (para 3.3) shall attract the normal lending rates.
3.4	INVESTMENT IN COMMON INFRASTRUCTURE OR FACILITIES BY AN INDUSTRY ASSOCIATION, TRUST OR CO-OPERATIVE SOCIETY IN AN INDUSTRIAL CLUSTER OR ESTATE.
	Investment in common infrastructure facilities owned by the association, trust or co-operative society of the units participating in the TUF scheme, to the extent necessary for this purpose, including the following:
	(1) Common utilities, viz. water supply, power substation etc.
	(2) Common captive power generation
	(3) Common effluent treatment plant.
	Any additional investments would attract the normal lending rates.
3.5	VOLUNTARY RETIREMENT SCHEME (VRS)
	Voluntary retirement scheme (VRS) for restructuring of man power of an existing unit as a part of the technology upgradation project will be eligible for funding as a part of the project. However, interest reimbursement will not be admissible on that part of the investment.
3.6	CUT-OFF DATE UNDER TUFS
	The loans which have been sanctioned prior to 1.4.99 but not disbursed will be re-considered under TUFS as fresh cases, if otherwise they meet the parameters of TUFS.In case of part- disbursed loans, the existing loan cases will have to be terminated and the remainder of the investment conforming to TUFS norms may be considered as a fresh project by the lending agencies. However, the Nodal Agencies and the co-opted PLIs may consider at their discretion the remainder of the project under TUFS without formal termination if the remainder project otherwise conforms to TUFS technology norms. Whenever a new machine or equipment which is equal or superior than the bench marked equipments or machines, already included in the existing list of items of the GR, is made eligible under TUFS, the TUFS benefits for such equipments may be extended for the loans disbursed after 1-4-1999. In case inclusion of any machinery/equipment is due to relaxation of norms laid down in the GR of TUFS, the effective date of eligibility of interest reimbursement would be applicable only from the date of the meeting. 3.7 COVERAGE OF INVESTEMENT MADE IN TUFS COMPATIBLE PROJECTS AFTER 01.04.99 FUNDED BY OTHER SOURCES (OTHER THAN BANK LOAN) UNDER TUFS: The investement made in TUFS compatible projects after 01-04-1999 funded by other sources (other than bank loan) are covered under TUFS. The general guidlines for coverage of such units are as under : "As long as the technology upgradation project is executed within the TUFS period (i.e. the initial finding from other sources is after 01/04/1999) and meets the bench-marked technology and other eligibility norms and provided the units have approached the bank / F1 for financial assistance prior to making their own investement in the project, initial funding from another source should not deprive the unit of the benefit of TUFS, if it is covered by an appropriate term loan in due course. However, the benefit of TUFS interest incentive will be coteminous with the loan disbursal". 3.8  BENEFIT OF OTHER SCHEMES : Textile/Jute units are permitted to avail of benefits of other schemes, in addition to TUFS, unless specifically provided otherwise. In case of doubt, the matter may be reffered to the Textile Commissioner for clarification.
4.	SECTOR-SPECIFIC ELIGIBILITY CONDITIONS:
4.1	COTTON GINNING AND PRESSING:
	a) Ordinarily, only composite ( cotton ginning with pressing) units will be eligible for coverage under the Scheme. However, independent ginning or pressing units will be eligible to modernise under the scheme provided they forward - integrate or backward - integrate with the pressing and ginning facility respectively, of eligible technology level.
	b) Only double roller gins or saw gins will be eligible.
	c) Bailing Press Standards should be in conformity with the amended BIS specifications.
	d) A unit with existing 2-stage manual bale pressing machine will not be compelled to replace it, while going for other modernisations, as per TUFS. However, a unit replacing the bale pressing machine or installing bale pressing machine for the first time will be required to install only single stage automatic bale pressing machine.
	e) Government had decided that when the cotton ginning & pressing units have become eligible for concessional finance under the Technology Mission on Cotton (TMC) vide No.1/CM/2000 (I) dated 17th January, 2000, such units are no more eligible for assistance under TUFS with effect from that date.However, applications received prior to the approval of the TMC shall be processed in normal course under TUFS. f) f) With effect from 25.07.2001, coverage of cotton ginning & pressing units has been restored under the scheme with the stipulation that a cotton ginning & pressing unit will have the option to avail of benefits either under the TUFS or under the TMC but not both.
4.2	SPINNING/SILK REELING & TWISTING/WOOL SCOURING & COMBING/SYNTHETIC FILAMENT YARN TEXTURISING,CRIMPING & TWISTING
	a) Cotton ring spinning system:
	(i) In the cotton ring spinning system, only modernisation of existing obsolete spindleage through technology upgradation will be permitted. The replaced old and obsolete spindles should ordinarily be scrapped and made completely unserviceable unless their operations are established to be viable. [ Note : Ring frames older than 15 years and back up machinery/equipment older than 20 years should invariably be scrapped.]
	(ii) (a) New units or capacity expansion in an existing unit will be permitted only if investment is also made in downstream matching capacity in yarn processing or weaving preparatory and / or weaving / knitting, which must be installed simultaneously, provided that an existing spinning unit expanding its capacity to 12,000 or more spindles but not more than 25000 spindles shall be required to install down stream permissible manufacturing capacity matching with 50% of the expanded spinning capacity. (The downstream value addition of the existing units may be worked out on the basis of actual production returns submitted by the units to the Office of the Textile Commissioner should be the basis for the production of actual count of yarn by concerned unit.).
	(b) The eligibility of yarn processing as an eligible downstream value addition activity will be to the extent enumerated below: Yarn singeing together with wet processing of yarn, viz. bleaching/mercerising/dyeing(cone/hank dyeing)/yarn printing; OR Cone winding/doubling/fancy doubling alongwith one or more of the above mentioned wet processing activities; OR Doubling/fancy doubling, singeing and one or more of the above mentioned wet processing activities; OR Yarn sizing and warping.
	(c) Installation of matching new fibre dyeing capacity as an eligible value addition process for expansion of spinning capacity under TUFS. However, existing fibre dyeing capacity will not be considered as a value addition process.     (d) The cotton ring spinning units are pemitted to install back-up facilities for de-bottlenecking, viz., cone winding machine, cards, draw frame, speed frame, blow room etc. without increase in the spindleage, provided the unit is at or above the MES level, viable and such investments bring up the unit to the desired benchmark technology level as a whole.     (e) Auto doffer system for ring frame as a retrofit is covered under the scheme subject to the condition that the reng frame on which the auto doffer system was to be retrofitted and auto doffer proposed to be retrofitted should be of same mahe / manufacturer.
	(iii) Installation of compact spinning machine for setting up of new capacity or for modernisation / replacement of existing ring frames is permitted. Existing and new units set up for manufacture of compact yarn have been exempt from the stipulation of Minimum Economic Size and downstream value addition norms under TUFS. In such upgradation of existing ring frames by changing the existing drafting system to compact spinning drafting system has been covered under TUFS. (iv) Post spinning / twisting of yazrn processing plant on stand alone basis to produce two fold twisted yarn or singeing yarn without putting up yarn spinning unit are covered.
	(b) Open end/Dref/Parafil/Selfil/Airjet spinning system : These spinning systems being, by and large, specialised yarn making systems, modernisation, capacity expansion or new units will be permitted.
	(c) Worsted spinning system: (i) Technology upgradation of existing capacity and expansion/new units with appropriate eligible technology will be permitted. (ii) Independent wool scouring and combing units will also be eligible for funding under the TUFS.
	(d) Woollen/shoddy spinning system: (i) Wollen system of spinning includes semi-worsted system of spinning. (ii) Technology upgradation in existing units and capacity expansion/new units in these sectors with appropriate eligible technology will be permitted.
	(e) Silk reeling & twisting : (i) Technology upgradation in the existing capacity and expansion/new units with appropriate eligible technology will be permitted. (ii) The replaced obsolete reeling/twisting machinery should normally be dismantled unless their operations are established to be viable.
	(f) Synthetic filament yarn texturising, crimping and twisting: Replacement of existing obsolete machinery, capacity expansion or installation of new units with appropriate eligible technology will be permitted.
4.3	VISCOSE FILAMENT YARN:
	(i) Replacement of existing obsolete machinery, capacity expansion or installation of new units with appropriate eligible technology will be permitted.
	(ii) The replaced obsolete machinery should ordinarily be dismantled unless their operations are established to be viable.
4.4	WEAVING, KNITTING AND NON-WOVEN / TECHNICAL TEXTILES / FABRIC EMBROIDERY MANUFACTURING UNITS:
	a)   I. Essential for non-woollen weaving units:
	(i) An appropriate configuration of looms and machinery conforming to minimum economic size.
	(ii) In case of technology upgradation in an existing unit, the replaced old and obsolete looms should ordinarily be scrapped and made unserviceable unless their operations are established to be viable.
	II. Decentralised (SSI) weaving sector: In-situ upgradation of existing ordinary looms of 140 cms. width to semiautomatic shuttle loom with additional features like weft stop motion, warp stop motion, positive/semi-positive let off motion with or without dobby/jacquard, is permitted to decentralised powerloom sector. Replacement of an ordinary loom by a new semi-automatic shuttle loom of minimum width of 165 cms with benchmarked technology features are permitted. New units in the decentralized powerloom sector are permitted to install semiautomatic looms with benchmarked technology features under TUFS. III. Handloom weaving: Handloom sector is eligible for taking the benefits of TUFS for all machinery already listed in the GR on TUFS as amended from time to time and permitted for other sectors including powerloom and mill sector. In handloom sector only weaving activity is different from powerloom and mill sector while other activities particularly processing are same. Handlooms with specified benchmark features operated without the use of power have been covered.
	b) Essential for woollen units:
	(i) An appropriate configuration of looms and machinery conforming to minimum economic size.
	(ii) In-house weaving preparatory at least matching with the weaving capacity. (in the case of SSI units, weaving preparatory is not essential).
	(iii) In case of technology upgradation in an existing unit, the replaced old and obsolete looms should ordinarily be scrapped and made unserviceable unless their operations are established to be viable.
	c) Independent weaving preparatory units: An independent SSI / non-SSI (woollen or non-woollen) weaving preparatory unit will install weaving preparatory machinery as listed in Annexure-D1.
	d) Knitting units: As given in the Annexure-D-I
	e) Non-wovens/technical textile manufacturing units: Machines required to manufacture needle punched/technical filters/blankets/floor coverings/automotive carpets/geo textiles/synthetic or leather non-wovens and such other non-wovens and technical textiles, as listed in Annexure - D2 are eligible for coverage under TUFS.
4.5	GARMENT/MADE-UP MANUFACTURING:
	a) Woven and / or knitted garment and / or made-up manufacturing or combination thereof will be eligible.
	b) Garment / made-up manufacturing and other accessory equipments as required are to be installed out of the list in Annexure-E.
4.6	PROCESSING OF FIBRE/YARN/FABRICS/GARMENTS/MADE-UPS
	a) Processing machinery including essential quality control equipments listed in Annexure-F (1 to 4) for fibre/yarn/fabrics/garment/made-up processing and finishing will be eligible.
	b) Pollution control equipments listed in Annexure-F(1to4) as essential must also be installed.
	c) Utility and other machinery listed in Annexure - F(1to4) can be installed at the option of the entrepreneur as required.
4.7	JUTE TEXTILES:
	a) Jute softening & carding, drawing, spinning and weaving:
	(i) New machinery of eligible technology as listed in Annexure-G will be permitted.
	(ii) Import of second hand machinery of eligible technology with a maximum of 10 years' expired life (vintage) and with minimum of 10 year residual life will also be eligible subject to the conditions stipulated under para 3.2 supra.
	b) Spinning and weaving/knitting of jute blends:
	(i) Eligibility conditions for units spinning jute blends will be the same as for cotton spinning system detailed in para 4.2
	(ii) Eligibility conditions for units weaving/knitting jute blended fabrics will be the same as for non-woollen weaving and knitting as detailed in para 4.4.
	c) Jute-blended garment/made-up manufacturing: Eligibility conditions for units manufacturing jute-blended garments and/or made-ups will be the same as for non-jute garment/made-ups manufacturing detailed in para 4.5.
	d) Processing of jute products:
	(i) Processing machinery as listed in Annexure-G are eligible.
	(ii) Quality control and pollution control equipment eligible for TUFS funding will also be eligible as listed in Annexure-G.
	e) Processing of jute-blended products: Eligibility conditions will be the same as for processing of non-jute textile products as detailed in para 4.6
	f) Material handling: The machinery for material handling as listed in Annexure-G are essential for modernising jute units.
	5. INTERPRETATION OF ELIGIBILITY:
	(1) The Government has constituted a Technical Advisory Committee (TAC) with the Textile Commissioner (convenor) the Jute Commissioner and technical experts from the Textile Research Institutions (TRAs), industry and academic field covering the different segments, as members.
	(2) If any question of interpretation or clarification is raised by the Nodal Agency as to the eligibility of any unit or machinery under the scheme, the views of the Technical Advisory Committee appointed in this behalf will be obtained.
	(3) The role of the TAC has since been expanded to cover the function of monitoring the scheme also and TAC has been re-designated as Technical Advisory-cum-Monitoring Committee (TAMC).