Ludhiana Textile Industry Grapples with Massive ATUFS Subsidy Backlog
A severe backlog of unpaid subsidies under the Amended Technology Upgradation Fund Scheme (ATUFS) has plunged numerous textile units in Ludhiana into a state of acute financial distress. Despite making substantial investments in modern machinery between 2016 and 2022 to boost productivity, many manufacturers are still awaiting the promised financial support from the Ministry of Textiles, leaving them in a precarious position.
Scheme Guidelines and Application Hurdles
Under the ATUFS guidelines, applicants were eligible for subsidies on loans taken for new machinery, provided that at least 50% of the machinery cost was covered by the loan. Additionally, the equipment had to be sourced exclusively from suppliers—whether domestic or international—that were enlisted with the textile commissioner's office. A critical step in the process involved a physical audit conducted by a four-member joint inspection committee (JIC).
However, even after receiving approval from the JIC, many subsidy applications are being delayed by officials at the textile commission. This bureaucratic bottleneck has exacerbated the financial strain on manufacturers, who relied on these funds to offset their investments.
Financial Impact on MSME Units
Vinod Thapar, chairman of the Knitwear Club, highlighted that MSME units operate on razor-thin margins. He emphasized that the years-long wait for subsidies has placed these small-scale operators in an increasingly vulnerable financial state, as the expected relief remains elusive. The scale of the crisis is substantial, with chartered accountant Raj Mittal, technical advisor to the Knitwear Club, estimating that the pending subsidy amount in the Ludhiana district alone totals approximately Rs 250 crore.
Mittal further noted that many applications were rejected based on clauses that the industry views as lacking a clear basis. Specifically, objections were raised against manufacturers who utilized export agencies to facilitate the transit of machinery from foreign countries. He stressed that these small enterprises took on significant debt specifically because the subsidy was available; now, without that support, they are struggling to stay afloat.
Industry Response and Grievance Redressal
In a bid to seek redress, over 150 unit owners from Ludhiana have registered formal complaints on the i-TUFS portal, a digital grievance platform launched by the Ministry of Textiles in December 2025. This move underscores the growing frustration within the industry as manufacturers seek accountability and timely disbursement of funds.
When contacted for a response, textile commissioner Vrunda Manohar Desai declined to comment, stating she was not authorized to speak on the matter. This lack of official communication has only added to the uncertainty faced by the textile units.
Broader Implications for the Textile Sector
The ongoing subsidy delays threaten not only the financial stability of individual units but also the broader competitiveness of Ludhiana's textile sector. As manufacturers grapple with mounting debts and operational challenges, the need for swift government intervention becomes increasingly urgent to prevent further economic fallout in this key industrial hub.
