An In-Depth Guide to the Technology Upgradation Funds Scheme (TUFS)

The Technology Upgradation Fund Scheme (TUFS) is a government initiative introduced by the Ministry of Textiles to promote technological advancement and boost competitiveness in the Indian textile sector. It offers financial support to upgrade machinery, improve productivity, and adopt modern technologies. It is a key part of India’s efforts to strengthen the manufacturing base and generate employment. The scheme encourages capital investment in textile units by offering reimbursement through Capital Investment Subsidy (CIS). It is structured to cater to different segments within the industry, supporting sustainable and inclusive growth.

Objectives of the scheme

The primary objective of TUFS is to promote employment, exports, and productivity by facilitating the modernisation of textile units. It aims to make Indian textile manufacturers globally competitive through financial incentives that help them adopt the latest technologies. The scheme is aligned with the government’s vision of a strong and self-reliant economy. For Indian businesses, especially SMEs, TUFS serves as an important policy measure for accessing capital and upgrading infrastructure in a competitive yet sustainable manner.

• Encourage investment in state-of-the-art textile machinery
• Improve quality and productivity in manufacturing units
• Promote employment generation across rural and urban areas
• Support textile exports by boosting global competitiveness
• Promote energy efficiency and sustainable industrial practices

Eligibility criteria of the scheme

TUFS is designed to benefit textile units across various sub-sectors that meet specific eligibility conditions. Indian entrepreneurs must ensure that their projects fall within the defined scope and adhere to operational guidelines to avail of the benefits. The eligibility criteria focus on encouraging genuine investment in technology rather than mere expansion. Units must be registered with the appropriate industry bodies and maintain proper records to claim the subsidy.

In parallel with your TUFS planning, you can also check your pre-approved business loan offer to access faster funding and complement the subsidy benefits.

• Existing and new textile units with approved machinery
• Units must fall under the notified sectors/sub-sectors
• Should possess Udyam Registration and PAN
• Investment must meet the minimum required benchmark
• Must comply with the government’s reporting and documentation norms

Background of Technology Upgradation Funds Scheme

Introduced in 1999, TUFS has evolved through several versions to meet the changing needs of the Indian textile sector. Its foundation lies in encouraging mechanisation, promoting productivity, and supporting competitiveness. Over the years, TUFS has disbursed substantial subsidies, enabling manufacturers to upgrade their production capabilities.

• First launched in 1999 to modernise the textile industry
• Revised several times, including RR-TUFS and MTUFS
• ATUFS launched in 2016 as the latest version
• Focus shifted towards Capital Investment Subsidy
• Simplified application and disbursement process under ATUFS

Aim of the TUFS

The overarching aim of TUFS is to make India a global leader in textiles by supporting the adoption of the latest manufacturing technologies. It helps companies reduce production costs, improve efficiency, and become more competitive internationally. TUFS is a catalyst for innovation and growth, aimed at generating employment and boosting exports. For Indian businesses, especially in rural and semi-urban areas, it provides an opportunity to transition from traditional to advanced manufacturing methods while ensuring sustainability and long-term viability.

Major categories of the scheme

TUFS covers a range of segments within the textile sector, offering different subsidy levels based on the nature and scale of the unit. These categories are designed to ensure that both large-scale and smaller enterprises benefit from technological upgrades. By covering spinning, weaving, knitting, and technical textiles, the scheme accommodates the entire textile value chain.

• Garment and technical textiles – 15% subsidy on capital investment
• Weaving, knitting, processing units – 10% subsidy for standalone units
• Composite units with multiple processes – Combined support under multiple categories
• Jute, silk, and handloom sectors – Support based on notified conditions
• Subsidy cap – Rs. 30 crore per entity under each category

Benefits to the textile industry

ATUFS offers transformative benefits to the textile industry by enhancing technological capabilities and production efficiencies. It facilitates job creation, promotes exports, and boosts the sector’s global competitiveness. With financial incentives for modernisation, textile units are better equipped to meet market demands and adopt eco-friendly practices. The scheme also strengthens the domestic supply chain and reduces import dependency.

• Boosts quality and productivity through technology
• Encourages innovation in fabric and product development
• Strengthens infrastructure and global market reach
• Reduces wastage and operational inefficiencies
• Supports sustainable and energy-efficient operations

Application process

The TUFS application process is structured to ensure transparency and ease of access for eligible textile units. Applicants must register online via the iTUFS portal and submit required documentation including project reports, invoices, and bank verification. The process involves scrutiny by the Ministry and regional offices. Timely compliance ensures seamless disbursement of subsidies, making the process business-friendly.

• Register the unit on the official iTUFS portal
• Submit project details, investment proof, and machinery invoices
• Obtain Unique Identification (UID) from the portal
• Upload documents for claim processing and verification
• Receive subsidy directly into the applicant’s bank account

What is ATUFS?

ATUFS stands for Amended Technology Upgradation Fund Scheme, introduced in 2016 to streamline subsidy delivery and support technology adoption. It replaced earlier versions of TUFS, focusing on a single capital investment subsidy instead of multiple support mechanisms. ATUFS aims to encourage textile units to invest in benchmarked machinery while ensuring efficient and simplified fund distribution.

• Launched by the Ministry of Textiles in 2016
• Offers Capital Investment Subsidy (CIS) instead of interest reimbursement
• Targets modernisation in garment, technical, and processing sectors
• Applies a one-time subsidy model for faster execution
• Operated through the iTUFS online portal for transparency

Advantages of ATUFS

ATUFS brings significant advantages by creating a robust ecosystem for textile development. It simplifies financial support, ensures faster disbursement, and covers a broad spectrum of textile operations. The scheme promotes entrepreneurship, particularly among MSMEs. It also helps Indian manufacturers match international standards in production and innovation, making the textile sector globally competitive and resilient.

• Transparent and efficient subsidy disbursement process
• Wide coverage across diverse textile sub-sectors
• Promotes capital investment and job creation
• Supports export-oriented units with advanced machinery
• Facilitates collaboration with State government textile policies

Conclusion

ATUFS is a critical initiative that empowers India’s textile sector with modern technology and financial support. It drives productivity, sustainability, and global competitiveness through accessible funding. As India aims to lead in global textile exports, schemes like ATUFS are essential. Businesses looking to modernise operations or scale production can also consider a business loan to complement government support and achieve long-term growth.

Businesses looking to modernise operations or scale production can also apply for our business loan to complement government support. To move forward faster, don’t forget to check your business loan eligibility now.