ATUFS Logjam Chokes Ludhiana Textiles: ₹250-Crore Subsidy Delay Pushes MSMEs to the Brink
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Subsidies Stuck, Cash Flows Squeezed
Ludhiana’s textile and knitwear industry one of India’s most important manufacturing clusters is grappling with acute financial stress as subsidies worth over ₹250 crore under the Amended Technology Upgradation Fund Scheme (ATUFS) remain blocked for years. Unit owners say the prolonged delay, largely linked to documentation objections on imported machinery, has left them struggling to service bank loans taken specifically to modernise their plants.
Several subsidy claims have been pending with the Ministry of Textiles for as long as six years, eroding working capital and disrupting production cycles. The situation has dented confidence in future investments, even as units face rising costs and tight credit conditions. More than 150 textile entrepreneurs from Ludhiana have formally lodged grievances on the i-TUFS portal, launched in December 2025, while 564 applications have been filed nationwide highlighting that the problem extends well beyond one district.
Technical Rejections and Years of Uncertainty
Industry experts point to procedural opacity as a key reason behind the impasse. Raj Mittal, chartered accountant and technical consultant to the Knitwear and Textile Association, Ludhiana, explained that ATUFS operational from February 2016 to March 2022 encouraged mills to invest in advanced imported machinery financed through bank loans, with the promise of timely reimbursement.
However, many claims were later rejected on technical grounds, often without clear explanations of deficiencies. As cases languished unresolved, MSMEs bore the double burden of loan repayments and withheld subsidies, leading to mounting interest costs and financial losses. For smaller units, the uncertainty has been particularly damaging, forcing them to postpone upgrades, scale back operations, or rely heavily on short-term borrowing.
Hope after Assurance, But Industry Wants Action
Seeking relief, industry representatives recently met Textile Commissioner Vrinda Manohar Desai in Mumbai to flag the prolonged delays and procedural hurdles. According to Vinod Thapar, Chairman of the Knitwear Club, the commissioner offered a positive and clear assurance that pending ATUFS cases would be resolved at the earliest, signalling a more proactive stance toward MSME support. For Ludhiana’s industrialists, the stakes are high. They warn that unless assurances translate into swift disbursements, the fallout could include:
- Deeper working capital stress for MSMEs
- Delays in technology modernisation
- Potential job losses across the textile value chain
As one of India’s largest textile hubs waits anxiously, the industry hopes that clearing the ATUFS backlog will restore confidence, unlock stalled investments, and stabilise a sector critical to regional employment and exports.
01:32 PM, Feb 06
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