Tamil Nadu government provides interest subsidy to modernise textile mills

Government of Tamil Nadu allocates ₹10 crores for 6% interest subvention scheme to modernize textile mills, benefiting spinning sector.

The Department of Handlooms, Handicrafts, Textiles and Khadi, Government of Tamil Nadu, has allocated ₹10 crores for the current financial year (2024-2025) to implement the 6% interest subvention scheme for textile mills that want to invest and upgrade technology.

According to an order dated December 9, 2024, the Department has allocated ₹500 crores for implementation of the scheme for 10 years from 2024. The working guidelines of the scheme say that 60% funding will be for ring frame spinners, 25% for open-end spinning, and 15% for air jet or electro spinning units.

The 6% interest reimbursement will be applicable for five years or actual loan repayment period, whichever is lesser.

All spindles or rotors that are more than 15 years old can be modernised under this scheme. A spinning mill can avail of benefits once and only for purchase of machinery and spares directly from the manufacturer.

The Southern India Mills’ Association (SIMA) welcomed the scheme and said this will spur investments in the spinning sector. Of the total 45 million working spindles in the country, 19 million spindles are in Tamil Nadu. Totally, 15 million spindles are more than 15 years old, including 12 million in the State. These need to be replaced once seven to 10 years.

When Tamil Nadu government wanted to support spinning sector, the industry sought financial support only for modernisation as there is already over capacity in the spinning sector. The scheme, which was introduced in 2019 with 2% incentive was not attractive, will help modernise about 3.5 million spindles in Tamil Nadu, said SK Sundararaman, chairman of SIMA.

G. Arulmozhi, head of the Openend Spinning Mills Association, said the banks should now operationalise the schemes. They usually do so immediately for capital subsidy schemes. Open-end spinning mills change the rotors once in three years. Production will increase 10% to 20% because of modernisation.