By Mr. Anuj Bhagwati, President, TMMA*
The GDP growth during 2010-2011 was 8.5 per cent as compared to 7.4 per cent during the preceding year. The Index of Industrial Production (IIP) was at 8.2 per cent during 2010-11 as compared to 10.4 per cent during 2009-2010. The foreign exchange reserves have risen from $280 billion in 2009-2010 to $305 billion the next year. However, inflation remains high: it was at 9.9 per cent as on March 31, 2010, at 8.9 per cent in March 2011 and was hovering around 9 per cent during June 2011. The capital goods sector which grew by 27.4 per cent in March 2010 grew only by 12.9 per cent in March 2011, while the manufacturing sector grew by 7.9 per cent as against 16.4 per cent.
So far as the textile engineering industry (TEI) is concerned, the condition improved during 2010-11 with a better performance put up by the textile industry.
Capacity utilisation
As per the survey of the Textiles Committee, during 2008-09 the estimated annual installed capacity of TEI was Rs. 8,048 crores. The total provisional production of textile machinery, parts & accessories during 2010-2011 recorded an increase of 45 per cent at Rs. 6,150 crores as against Rs. 4,245 crores achieved during the previous year.
Capacity utilization increased to 76 per cent in 2010-11 compared to 53 per cent in the preceding year. Demand recession faced by the industry had severely affected capacity utilization during the previous years. Capacity utilization might improve further during 2011-12.
Imports of textile machinery have risen from Rs. 4,500 crores during 2009-10 to Rs. 5,000 crores (estimated) during 2010-11.
Exports during 2010-11 had been estimated at Rs. 650 crores against Rs. 582 crores achieved during 2009-10. With the overall improvement of the industry, exports are expected to grow in the coming years.
The welcome spurt in demand from the textile industry during 2004-2007 had encouraged TEI to develop and expand the machinery manufacturing capacity. This was particularly so in the spinning machinery sector. Units in the industry had been striving hard to step up production and shorten the delivery period. Due to the recessionary pressure in the following years the delivery periods were wiped out. At present demand is again looking up, and it is our earnest endeavour to meet the demand in quantum, quality and performance coupled with effective after-sales service.
Current situation
The Government policy of discouraging composite mills during the 1960s, 1970s and 1980s and thereby relegating the weaving and processing industry to the decentralized sector was a de facto encouragement for low technology machinery. Further, the earlier reservation policy of the Government in hosiery and garment industries resulted in proliferation of small/low tech units, and also units were encouraged to undertake large-scale second-hand machinery imports. Even today the preference of a large section of the textile industry to imported second-hand/used machinery is affecting the growth of domestic machinery manufacturing.
A strong textile engineering industry that can grow, compete and export would be able to provide strong support to the Indian textile industry, to make it vibrant and competitive. It is well known that TEI has made a significant contribution to the phenomenal growth of the textile spinning sector. I am confident that it will be possible for TEI to acquire technological strength in many more sectors, like in spinning, provided they are properly supported by the textile industry and by fair Government policy.
TEI needs full support from the Government so that it has a level playing field and becomes competitive enough to supply the latest technology machines to the textile industry.
With this, India could be a manufacturing hub of textile machinery, parts, components and accessories and thus contribute to employment, generation and GDP growth and be able to meet 70-75 per cent demand of the Indian textile industry for high tech machinery.
In the past year, we have also seen significant uncertainty due to sudden policy shifts on account of suspension of TUFS and control of cotton and yarn exports. I do believe a long-term policy environment in these sectors is also necessary.
Measures for growth orientation
We have been representing to the Government for removal of fiscal anomalies. I would like to highlight some of the support measures needed to promote this industry, which include changes in fiscal policy, removal of hurdles facing the industry and assistance required for improving the technology, production and exports:
• Excise duty on all items of textile machinery at 8 per cent. There should be no exemption.
• Excise duty on all parts, components and accessories of the textile machinery should be less than complete machinery, i.e., at the level of 4 per cent.
• The floor level of customs duty on capital goods should be at 7.5 per cent.
• The rate of duty on raw materials, parts, components and accessories should be less than that on complete machinery, in general, at least to 5 per cent.
• Reduction in import duty on dedicated parts, components and accessories of shuttleless looms and other hi-tech machines which are not made in India so far, from 5 per cent to zero level.
• Uniform treatment to domestic suppliers of machinery to EPCG licence holders and 100 per cent EOU, as both are deemed export.
• No subsidy under the Technology Upgradation Fund Scheme and its derivatives, namely, 20 per cent CLCS and 15 per cent CLCS Scheme on the imported second-hand textile machinery, in the name of modernisation
• Ban on import of second-hand shuttleless looms with weft insertion rate less than 750 mtrs per minute.
We hope that the Government would act on our proposals.
Joint Working Group
A Joint Working Group (JWG) had been constituted by the Ministry of Heavy Industries & Public Enterprises under the chairmanship of the Joint Secretary, Department of Heavy Industry, to bring out a comprehensive action plan and policy initiative to strengthen the textile machinery manufacturing eco-system in the country.
The first meeting of JWG was held on November 16, 2010, in New Delhi under the chairmanship of Mr. Harbhajan Singh. It was proposed that a visit of JWG to some units of TEI in different places be organized in order to have first-hand information of the manufacturing activity with a dialogue with the TEI representatives and representatives of the user industry regarding the problems and suggestions.
Its second meeting was held under the chairmanship of Mr. Harbhajan Singh on March 4, 2011, in Coimbatore along with a visit to the LMW plant and meeting with representatives of the local textile industry and SIMA.
In this context it is worth mentioning that the Association initiated the process of selecting an expert consultant to conduct a detailed study of the textile engineering industry with the goal of the Association preparing a Vision Paper for the next 10-15 years. We have zeroed in on Gherzi Textil Organisation AG, Switzerland, for this study. This effort also has the blessings of the Department of Heavy Industry and the Ministry of Heavy Industries & Public Enterprises, and the Government has agreed in principle to finance a part of this project. We hope that this report would go a long way in helping frame Government policies and create an atmosphere conducive for investment and technology upgradation of the textile engineering industry.
*Excerpts from the speech delivered by Mr. Anuj Bhagwati, President, TMMA at the Association’s AGM held recently in Mumbai