The Indian economic structure has recently been modified by the two major changes introduced by the Government in late 2016 and mid-2017. Demonetization and the Goods and Services Tax (GST) gave the industrial sector a major blow. Whereas the organized sector came through with minor scratches, the small and medium industrial players were badly bruised. On the one hand, where changing trends in the economy have proved troublesome for a lot of industrial players, there are numerous industrialists who appreciate the changes and have highlighted the benefits of the reforms. One of them is Mr. Pradeep Sinha, the Founder of Inditech International which represents nearly 20 leading international brands in the textile machinery and technology development sector.
Mr. Sinha brought into the foreground the positive side of demonetization and GST which was covered under the temporary chaos and instability created initially as most of the businesses were cash driven and the sudden demonetization left the small and medium-scale industries perplexed. But the introduction of these reforms was necessary to root out the black money in the Indian economy. With the reform coming into force almost all the transactions will be above board bringing revenue to the State.
However, with these new changes coming in, manufacturers were confused about what steps to be taken further. The industry came to a standstill as people wanted to see how the tax policy works out in the longer run, and hence did not engage in any investment or expansion. Projects got shifted to next year as there was no certainty about what would happen if the Government revised taxes after considering the feedback received from the industry. It was better not to be hasty in an uncertain condition.
As the period of shock faded and the industry stabilized, people started considering investment and working on the projects that were on hold. Presently, the textile industry is witnessing increasing investments in the synthetic fibers sector, mainly as the natural fibers sector is stuck as the profits from the Technology Upgradation Fund Scheme (TUFS) have not yet rolled in, and hence further investments slowed down. Small entrepreneurs are struggling to sustain themselves.
Inditech suffered the blow of this situation indirectly as customers put their investments on hold. Another problem faced not only by Inditech but by all similar companies was China’s huge expansion plan as a result of which the delivery period of the synthetic filament spinning plants got extended. This was because of no production space being available to them making the business slack down for another year at least thanks to huge orders for such plants from China.
Another twist that the market faced was in the nylon fibers sector where demand had increased. The Government removed the anti-dumping duty on import of nylon fibers from Taiwan and China, enabling the Indian industry compete with the much cheaper nylon fibers that these countries produce which has threatened the survival of the Indian industry that was surviving because of the duties imposed on the imported product made them expensive compared to the domestic product. In due course these products from Taiwan and China will flood the Indian market hitting domestic production.
Inditech is involved in two major businesses, namely, synthetic spinning, including TMT nylon, polyester POY, FDY and IDY, and TSUDAKOMA weaving. The synthetic fibers vertical of the company has witnessed an excellent turnover and growth in the past year, specifically IDA and FDY enjoying very good demand. The weaving vertical of the firm has excelled as well, and cotton production has picked up and has become a big generator of business for the firm. The processing segment of the firm has progressed as well and is generating good profits.
The firm is also engaged in selling air texturising plants under AIKI, a Japanese brand, and also BARUDAN automatic hemming machines that Mr. Sinha sees great future potential in because of its utility value. Presently, after any product such as towels are manufactured they have to be manually hemmed. This requires a considerable workforce and ample amount of time making it difficult to deliver the goods in time. The automated machine will not only save the required time but will also cut the cost as one machine could take the place of around 60-70 workers. The firm added another company in 2017 for tufted carpets. This Finland-based company has processing and finishing machines imported from Turkey.
Inditech, as a firm is progressing and so is the entire industry. Mr. Sinha says: “I personally feel that the industry will expand, our weaving sector is doing well and seems unstoppable, and overall very good fabric is being made.” People are discarding the old equipment and look forward to modernization. It is clear even to the small producers that it is impossible to compete in the present market, domestic or international, without modernizing.
The companies which fail to recognize such a change will eventually fall, and the new entrepreneurs with the latest machinery and equipment will triumph.
Keeping this scenario in mind Inditech has its focus on the present companies and their services. Inditech is continuously engaged in enhancing the services provided by them and are not moving towards unnecessary expansion and diversification. They are a small but highly skilled team of 20 employees, most of whom are experienced and trained engineers involved in upgrading the technology.
Textiles is a cyclical business where downfall and growth are part of the deal, but the Indian textile industry has largely been stable and still registers annual growth of 10-20%. The benefits of demonetization and implementation of GST are soon to be reaped in the form of money coming in through official channels which, if utilized properly, will lead to a far better infrastructure and lowering of taxes.
With the conditions smoothening and the steps to progress becoming clear, Inditech focuses on growing its share in the market by 30% in the coming year.
Mr. Sinha added: “Next year we will sell much more. The economy is growing fast and we see a bullish trend in the weaving businesses. We predict 2018 to be a great year for the Indian textile industry.”