Tamil Nadu launches scheme to modernize spinning mills in state

The government of Tamil Nadu has introduced a specialized scheme to tackle the widespread problem of outdated machinery. The initiative aims to boost productivity and quality across the state's spinning mills, thereby increasing their global competitiveness and encouraging the production of high-value items like Viscose Staple Fiber (VSF) and recycled yarns.

To achieve this, the scheme provides 6 per cent reimbursement (or subvention) on the total interest charged by banks for loans taken out specifically for technology upgrades. This subsidy is available for a maximum period of five years. The state has initially allocated Rs 10 crore  for FY25, as part of a larger, long-term Rs 500 crore ten-year investment plan.

Eligibility for the funds is strictly limited to the modernization of spindles and rotors in spinning machinery that is 15 years or older, covering all registered Ring Spinning, Open-End Spinning, and Airjet Spinning Mills in the state. The allocated funds are strategically distributed: 60 per cent is earmarked for Ring Frame mills, 25 per cent for Open-End rotor kits, and the remaining 15 per cent for Airjet/Electro Spinning technologies.

Essentially, the Tamil Nadu government is directly subsidizing the cost of capital to incentivize mills to acquire new, energy-efficient equipment. This vital move is expected to stimulate private investment and rapidly upgrade the manufacturing base of this critical regional industry.