Government Orders Recovery Of Rs 2,979 Crore TUFS Subsidy From 3,858 Units
Banks failed to upload mandatory documents despite seven opportunities; another Rs 1,388 crore subsidy to be withheld
The Ministry of Textiles has moved towards recovering subsidies disbursed under the erstwhile Technology Upgradation Fund Scheme (TUFS), ordering recovery of Rs 2,979 crore, along with applicable interest, from 3,858 textile units whose required documentation was not submitted by the concerned banks.
The decision was taken following a meeting of the Inter-Ministerial Steering Committee (IMSC) of the Ministry of Textiles held in New Delhi on August 25.
According to the decision, 3,858 units have been removed from the pendency list after banks failed to upload six mandatory documents on the i-TUFS portal. The Ministry had opened the portal seven times between 2019 and 2024 to enable banks to complete the documentation, but the required records were not submitted within the stipulated opportunities.
The committee has consequently recommended cancellation of the concerned accounts and initiation of recovery proceedings for the subsidy already released. In addition to the Rs 2,979 crore already disbursed, the remaining subsidy amounting to Rs 1,388 crore will be withheld.
The development could have significant implications for textile units that had availed themselves of TUFS-linked financing through banks, particularly those that have been unable to complete the documentation requirements.
Banks Failed to Submit Mandatory Documents
Under the TUFS framework, banks were required to upload six mandatory documents relating to beneficiary units on the i-TUFS portal. Despite repeated opportunities provided by the Ministry, the documentation remained incomplete in thousands of cases.
The portal was opened on seven occasions between 2019 and 2024 specifically to allow banks to address pending documentation. The failure to comply has now resulted in the IMSC recommending cancellation of 3,858 accounts and recovery of the subsidy already released.
The move underlines the Ministry’s increasingly stringent approach towards clearing long-pending TUFS cases and ensuring that subsidies are supported by the required records.
Physical Verification of 1,223 Units
The Ministry has also intensified scrutiny of another 1,223 units whose operational status remains uncertain.
These units either did not permit physical verification by the Joint Inspection Team (JIT) or sought postponement of the inspection. The authorities will now seek assistance from the respective district administrations to conduct physical inspections and establish whether these units are still operational.
The verification is expected to determine whether the units continue to function as genuine industrial establishments or have ceased operations after receiving TUFS-linked financial assistance.
The exercise could lead to further action depending on the findings of the physical inspections and the status of the subsidy claims.
Surat Units Could Face Pressure
The latest order is likely to attract particular attention in Surat, where a significant number of textile processing and manufacturing units have availed themselves of institutional finance linked to technology upgradation.
One of the immediate concerns is the possibility of banks initiating recovery proceedings against borrowers whose accounts fall within the affected list. Although the Ministry’s directions are primarily aimed at addressing deficiencies in documentation and subsidy claims, banks could seek recovery of amounts from the concerned industrial units.
Another area of concern relates to 102 accounts associated with SIDBI, where the required documents have reportedly not been uploaded. Surat is understood to account for a substantial share of these cases, potentially increasing the impact of the Ministry’s decision on the city’s textile industry.
The situation could therefore place additional financial pressure on affected weavers, processors and other textile manufacturers, particularly where subsidy recovery becomes linked to outstanding bank financing.
