If you own a textile business, a weaving unit, a garment factory or a processing facility, you already know the importance of the right machinery. Outdated looms slow production. Old processing equipment affects quality. Replacing or upgrading that equipment costs money you may not have sitting idle. The Technology Upgradation Fund Scheme, commonly known as TUFS, exists precisely to close that gap.
This article walks you through what TUFS is, who qualifies, what the Amended Technology Upgradation Fund Scheme (ATUFS) offered (note: new applications closed in August 2019, and the scheme’s subsidy window ended in March 2022) — with real figures, not vague generalities.
Technology Upgradation Fund Scheme (TUFS) Explained: What the Scheme Is and Why It Was Created
The Technology Upgradation Fund Scheme is a flagship scheme of the Ministry of Textiles, Government of India, designed to provide financial assistance to textile and jute manufacturing units for upgrading their technology and machinery. The core idea is straightforward: the government subsidises part of your capital investment in eligible new machinery so that the burden of modernisation does not fall entirely on you.
TUFS was first launched in 1999. Over the years it underwent several revisions — from the Modified Technology Upgradation Fund Scheme (MTUFS) to the Restructured Technology Upgradation Fund Scheme (RTUFS) and the Revised Restructured Technology Upgradation Fund Scheme (RRTUFS). The version is the Amended Technology Upgradation Fund Scheme (ATUFS), which was approved by the Cabinet in December 2015. New applications were accepted only up to 13 August 2019 (the official cut-off date notified by the Ministry of Textiles on texmin.nic.in), and the scheme’s subsidy disbursement window closed on 31 March 2022. No extension has been issued. The Ministry proposed a successor — the Textile Technology Development Scheme (TTDS) — but it has not been formally notified as of 2026.
It is a credit-linked subsidy scheme. That means the subsidy is tied to a term loan you take from an eligible lending institution — not a direct grant you receive without financing.
What the Government Was Trying to Solve When It Created TUFS
The objectives behind the TUF Scheme are both economic and sectoral. The Ministry of Textiles designed it to:
- Generate employment, especially for women, through growth in the garment and apparel segments.
- Enhance export of Indian textile by improving quality and productivity of products.
- Increase investment in the textile manufacturing sector, both in new greenfield units and expansion of existing units.
- Promote use of technical textiles – a rapidly growing segment with good export potential.
- Reduce dependence on imported fabrics by improving quality of domestic processing.
The underlying goal is to make Indian textile units more competitive globally — not just in cost, but in quality and technology capability.
Eligibility Criteria for TUF Scheme
Before you spend time preparing an application, check whether your entity qualifies. The following categories of entities are eligible for Capital Investment Subsidy (CIS) under ATUFS: -
- Companies registered under the Companies Act, 2013
- Limited Liability Partnerships (LLPs)
- MSMEs (Micro, Small and Medium Enterprises) as defined under the MSMED Act, 2006
- Entities having a valid Industrial Entrepreneur Memorandum (IEM) or Udyam Registration
- Export-Oriented Units (EOUs) and units operating in Special Economic Zones (SEZs)
It is important that the entity is involved in textile manufacturing. The subsidy is not available to trading firms, warehousing units, or service providers unless they are directly involved in textile production.
One additional condition worth noting: at least 50% of the eligible project cost must be financed through a term loan from a designated eligible lending institution. You cannot self-fund the entire investment and expect the subsidy.
Which Textile Segments and Machinery Are Covered Under TUF?
TUFS covers a wide range of textile manufacturing activities. Capital Investment Subsidy is available for investment in benchmarked machinery across these segments:
- Weaving and weaving preparatory — shuttle-less looms (rapier, projectile, air-jet, waterjet), warp preparation and sizing equipment
- Knitting — flat-bed and circular knitting machines
- Processing — machines for dyeing, printing, finishing of fibres, yarns, fabrics, garments, and made-ups
- Garment and made-up manufacturing — cutting, stitching, embroidery, and finishing equipment
- Technical textiles — machinery for manufacturing geo-textiles, agro-textiles, medical textiles, and other technical textile segments
- Jute sector — machinery for jute diversified products and processing
- Silk sector — reeling and twisting machinery
- Handloom sector — upgraded loom technology for handloom weavers
The Ministry publishes a benchmarked machinery list specifying exactly which machines qualify. Only brand-new machinery on this list is eligible. Second-hand machines — regardless of condition or age — are not covered.
What You Actually Receive Under ATUFS: The Subsidy Structure and Additional Advantages
The central benefit under ATUFS is the Capital Investment Subsidy (CIS). Here is how the subsidy structure works:
*Figures subject to Ministry of Textiles guidelines and scheme notifications. Verify current figures at the official iTUFS portal before applying.
Beyond the headline subsidy, the TUF Scheme delivers these concrete advantages to your textile business:
- One-time, non-repayable subsidy: The CIS is released after installation and commencement of commercial production — it is not a loan you repay.
- Both imported and indigenous machinery covered: You are not restricted to domestically manufactured equipment. If the imported machine appears on the benchmarked list, it qualifies.
- Improved access to institutional credit: Because the scheme is credit-linked, lenders treat ATUFS-eligible projects more favourably. Your loan proposal has government backing, which can ease the credit assessment process.
- Transparency through the iTUFS portal: You receive a Unique Identification Number (UID) on application, and you can track your claim status online — which reduces the uncertainty that has historically plagued subsidy claims.
Planning to invest in new machinery and need working capital or term loan support alongside your ATUFS application? Get to know more
The application process under ATUFS was conducted fully online through the iTUFS portal managed by the Textile Commissioner’s office. Note: The cut-off date for new UID applications was 13 August 2019; the portal no longer accepts fresh applications. The steps below describe the process that applied to registered applicants:
- Step 1 — Install the eligible machinery: You can apply for ATUFS subsidy only after the machinery is installed and commissioned at your unit. Pre-purchase application is not allowed.
- Step 2 — Arrange a term loan: Ensure you have a term loan from an eligible lender covering at least 50% of the eligible project cost. Without this, your application will not proceed.
- Step 3 — Apply on the iTUFS portal: Submit your application online. The portal requires details of the installed machinery, proof of investment, loan documentation, and entity registration details.
- Step 4 — Joint inspection: Following your submission, an officer from the Textile Commissioner's office (TXC) conducts a physical inspection to verify the installed machinery and photograph it using the i-TUFS application — which captures geo-tagged, time-stamped images for verification.
- Step 5 — Multi-stakeholder verification: Your application is reviewed by the TXC office, the Ministry of Textiles, and your lender bank. You can track progress through your UID on the portal.
- Step 6 — Subsidy release: Once all stakeholders approve, the Ministry of Textiles releases the Capital Investment Subsidy directly. You receive SMS and email updates through the process.
It is worth noting that if your unit previously availed benefits under RRTUFS or an earlier version of TUFS, your ATUFS subsidy entitlement will be reduced by the amount already received.
How ATUFS Differs from Earlier Versions of TUFS?
ATUFS — the Amended Technology Upgradation Fund Scheme — was the most recent operational version of the TUF Scheme, approved by the Cabinet Committee of Economic Affairs in December 2015. It replaced the earlier Revised Restructured Technology Upgradation Fund Scheme (RRTUFS) and was designed to address three gaps in previous versions: complexity in claim processing, inadequate focus on the garment and apparel segment, and low employment generation outcomes. Important: ATUFS is no longer open for new applications. The cut-off for new UID registrations was 13 August 2019, and the subsidy disbursement period ended 31 March 2022. No replacement scheme has been formally notified as of 2026; the Ministry of Textiles’ current technology-linked incentive for the textile sector is the Production Linked Incentive (PLI) Scheme for Textiles (notified September 2021), which targets Man-Made Fibre apparel, MMF fabrics, and Technical Textiles.
The key shift ATUFS introduced was moving from an interest subsidy model to a Capital Investment Subsidy (CIS) model. Under older versions of TUFS, the government subsidised your interest cost on the term loan. Under ATUFS, the government reimburses a percentage of your actual capital investment in eligible machinery — a more direct and transparent form of support.
The scheme is implemented through the Textile Commissioner's offices, which are being strengthened across states specifically to handle ATUFS claims at the ground level.
Why ATUFS Improved on Earlier Versions: What Changed and What It Means for You
Compared to earlier iterations of the TUF Scheme, ATUFS brings several improvements that matter in practice:
Direct capital subsidy instead of interest reimbursement
The shift to CIS means your benefit does not depend on your loan's interest rate or tenure fluctuations. You get a fixed percentage of your investment in eligible machinery — predictable and clear at the time of planning.
Higher focus on employment-generating segments
The 15% subsidy rate for garmenting and technical textiles reflects a policy choice: these segments generate more jobs per unit of investment, particularly for women workers. If your business operates in these segments, the ATUFS terms are more favourable than for other textile sub-sectors.
Fully online and traceable process
The iTUFS portal eliminates the need to chase paperwork across offices. Your application, inspection scheduling, approval status, and subsidy release are all tracked through a single system — with your UID as the reference throughout.
Coverage of imported machinery
If your expansion plan requires importing advanced textile machinery — and for certain technical textile categories this is often unavoidable — ATUFS covers it, provided the machine appears on the benchmarked list. This is a practical advantage over schemes that restrict support to domestically manufactured equipment.
Compatibility with state-level subsidies
ATUFS does not prevent you from simultaneously availing state government textile promotion incentives. Many state textile policies offer land, power, and additional capital subsidies. Stacking these with ATUFS support is permitted, subject to the combined subsidy not exceeding the capital cost of the machinery. Before combining schemes, verify the combined total against your eligible machinery cost to confirm no overshoot
Ready to Fund Your Textile Machinery Investment?
The Technology Upgradation Fund Scheme reduced the government’s share of your machinery cost — but the remaining investment still needs to be financed. A term loan from an eligible lender was a core procedural requirement under ATUFS. Note: Since ATUFS is no longer open to new applicants, textile MSMEs seeking government-backed technology investment support should explore the PLI Scheme for Textiles (for MMF/technical textile segments) or await formal notification of a successor scheme. A Shriram Business Loan can still support your machinery investment independently.
If you need a business loan to fund your textile machinery investment, Shriram Business Loan offers financing for MSMEs and established textile units. Speak with a Shriram Finance advisor to understand the loan structure that works best for your project requirements.
Apply for Shriram Business Loan today and take the next step towards upgrading your textile unit. Apply for Shriram Business Loan →
Frequently Asked Questions
Can non-manufacturing units apply under TUFS?
No. The Technology Upgradation Fund Scheme is only for units engaged in textile manufacturing. Trading, logistics, warehousing firms are not eligible. Manufacturing of Textile Products like Spinning, Weaving, Knitting, Processing, Garment Manufacturing, Technical Textiles etc. Your Business should be actively engaged in the said activities, to be eligible for Capital Investment Subsidy under ATUFS.
What kind of financial assistance does TUFS offer?
The ATUFS scheme offered a Capital Investment Subsidy (CIS) – a one-time, non-repayable reimbursement of a percentage of your investment in eligible benchmarked machinery. The rate is 15% for garmenting and technical textiles (capped at ₹30 Crore* per entity) and 10% for weaving, processing, jute, silk, and handloom segments (capped at ₹20 Crore* per entity). Earlier versions of TUFS offered interest subsidies on term loans, but ATUFS replaced this with the capital subsidy model.
Are imported machinery and equipment eligible under TUFS?
Yes. ATUFS is applicable both for domestic and imported equipment as long as the specific machine model and type is included in the benchmarked machinery list issued by the Ministry of Textiles. Subsidy is calculated on the basic cost of the machinery excluding customs duty, taxes and other charges. This is an important point to note: if you are planning to import equipment, you need to factor this in when estimating your eligible subsidy amount as customs duty paid is not included in the base for CIS calculation.
Can startups apply under TUFS for upgrading technology?
Startups can apply if they meet the structural eligibility criteria — registered as a company, LLP or MSME with valid Udyam Registration, and engaged in textile manufacturing. But there is a practical consideration: the scheme is credit-linked, so you need a term loan from an eligible lender covering at least 50% of the project cost. New entities with limited operating history may find it harder to secure the required term loan. If you are in this position, establishing your entity’s financial standing and credit profile before you apply will improve your loan application.
How is the progress of TUFS-funded projects monitored?
Progress monitoring happens through the i-TUFS application, a software tool used by designated Inspection Officers of the Textile Commissioner of India. When you submit your application after machinery installation, a joint inspection is scheduled. The inspection officer uses the i-TUFS app to document the physical status of the installation — capturing geo-tagged, time-stamped photographs of the plant location and installed machinery. This data forms the verification basis for your claim. After the initial inspection, your claim moves through a multi-stakeholder digital workflow involving the TXC office, the Ministry of Textiles, and your lender bank — all trackable through your UID on the iTUFS portal.