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The Technology Upgradation Fund Scheme (TUFS) is one of the flagship schemes of the Indian Ministry of Textiles and has helped the industry to garner investments of INR 24.3bn (EUR 290.3m). However, the level of interest rebate for the spinning sector in the revised TUFS has been cut from 4 % to 2 %; a signal that the government believes it has done enough for this sector and no special further support can be provided at the cost of other value adding sectors like weaving, processing and technical textiles. The effect will be fewer new spinning mill projects in the future. In the revised TUFS, the weaving and power-loom sector has come out as the new darling of the textile industry for modernisation and new project investments. The government has communicated a new but clear message that it is the fabric sector which is the weak link in the textile supply chain. It wants to hand hold the weaving sector to enable it to produce high quality fabrics, particularly wide width fabrics for home textiles and terry towel exports. Like technical textiles, the fabric processing sector was made a preferred sector under the TUFS five years ago. However, due to the poorly performing weaving sector and continuing recession in textile exports; the processing sector did not take off as expected. One core reason is the new policy of the State pollution control boards which insists on the setting up of Zero Liquid Discharge plants which entail a heavy capital expenditure burden relating to new projects. The government has, therefore, retained the same special incentives for this sector by way of 5 % interest rebate as also 10 % capital subsidy on processing eligible assets and including investment in ETP plants. Like the fabric processing sector, the nonwovens and technical textiles segments continue to enjoy preference and concessions under the TUFS almost on a par with the new special incentives given to weaving.