Substantial hike in TEI’s installed capacity unavoidable

The Indian Textile Engineering Industry (TEI) is one of the largest capital goods industries in India and has contributed substantially over the last decades to the economy of the country in term of providing modern machinery to the different segments of the textile industry, and exporting about 10 per cent of its production to more than 50 countries.

TEI consists of over 1,455 machinery and equipment manufacturing units. More than 600 units are producing complete machinery and the remaining parts and accessories. The investment in the industry is in the range of Rs. 6,900 crores with an installed capacity of Rs. 8,048 crores.

As a consequence of predominance of the decentralized sector in the textile industry, demand for domestic capital goods (generally) and hi-tech ones (specifically) have almost been non-existent in the past, except in the spinning sector. This, in turn, has influenced capacity creation and technological levels in the textile engineering industry. The entire range of machinery required for spinning is manufactured by TEI. However, in the absence of an economically viable demand in the past, the Textiles Machinery Manufacturing Industry (TMMI) did not build up enough capacity to produce hi-tech weaving, knitting and processing machines, earlier.

In the past, TEI had largely depended on foreign technical/technical-cum-financial collaborations, and  indigenous development was not significant. After the liberalization of industrial policy in 1991, the foreign collaborations were not renewed. TEI started upgrading its technology on its own. While the spinning sector was upgraded continuously, the pre-weaving sector followed later. Today the technology of pre-weaving machinery is of international standard. With the spurt in demand after 2004, TEI had geared up its technology level and ventured into shuttleless rapier looms, waterjet looms and airjet loom as well as continuous dyeing range, bleaching range, mercerizing and pre-shrinking ranges.

There has been insufficent research and development by the textile engineering units, and the R&D set-up by the industry at IIT Powai has yet to contribute effectively for the development of technology. However, efforts are being made by TEI to promote R&D.

The fortunes of TEI are linked with the textile industry, and the performance of TEI has also shown significant improvement during 2005-06 to 2007-08 in line with the textile industry.

Production of textile machinery has been steadily increasing over the last few years. However, the acute demand recession during 2008-09 and 2009-2010 has adversely affected the TEI growth significantly. Capacity utilization of the industry has also been increased during the last five years.

Textile machinery is one of the critical inputs in the accelerated growth process of the textile industry. TEI is now supplying 50 per cent of the requirement of the textile industry. It should be encouraged by the Government to increase its capacity further to meet the demand of the different segments of the textile industry in a time-bound manner.

During 2004-05 to 2007-08, production of textile machinery, components, spares and accessories has on an average increased by 20 per cent per annum. Considering the requirement of textile machinery by the industry to achieve its target and the growth, it is projected that production (inclusive of export production) of textile machinery would increase at the rate of 30 per cent per annum during the Eleventh Plan period. However, demand recession during 2008-09 and 2009-10 has adversely affected TEI growth.

The existing installed capacity of Rs. 8,048 crores may not be sufficient to meet the requirement of the textile industry considering the investment projections made by the industry for the XI Plan period. Moreover, the investment trend over the previous couple of years does not show any encouraging sign. Large-scale imports of second-thand machinery, particularly with the subsidy under TUFS, are adversely affecting TEI and its capacity expansion programme. FDI in weaving and processing machinery sector is not forthcoming. Proactive action from the Government might help TEI to increase its capacity in the long run.

Table-15.1: Production of textile machinery

Categories          2004-05                2005-06                2006-07                2007-08                2008-09                2009-10

(Est)

Spinning & Allied machines          2204.63                 2618.86                 3423.12                 3662.22                 2417.44                 2034.00

Synthetic fibre/yarn machines   376.42   447.20   584.48   625.30   412.79   346.00

Weaving & allied machines          374.23   444.49   580.95   621.64   410.35   345.00

Processing machines      382.36   454.11   593.85   635.19   419.29   351.00

Miscellaneous (spinning,

weaving & processing) machines              111.52   132.42   172.99   185.26   122.00   103.00

Textile testing / monitoring /

controlling equipment / systems              73.34     87.14     114.01   121.86   80.43     68.00

Hosiery needles & machines       30.36     36.04     47.00     50.46     33.31     28.00

Textile machinery parts & accessories    152.41   181.32   237.04   253.07   167.39   140.00

Total      3705.27                 4401.58                 5753.44                 6155.00                 4063.00                 3415

Percentage increase                       +20%     +31%     +7%       -34%      -16%

Source: Office of Textile Commissioner & TEI

Actual demand for textile machinery, parts and accessories

(Value in Rs. crores)

Years     Production          Export   Production          Imports                Total      %Share

(Minus Exports)                (less parts imported       Domestic             of demand

by machinery     Demand               met by

manufacturers                  indigenous

i.e. 15% of production)                  industry

2004-05                3705       361         3344       1916       5260       64

2005-06                4402       377         4025       4405       8430       48

2006-07                5753       425         5328       6021       11349    47

2007-08                6155       640         5515       4332       9847       56

2008-09                4063       607         3456       3802       7258       48

2009-10(E)           3415       500         2915       3988       6903       42

E= Estimated, Source: Production figures are taken and estimated as per recent survey of Textile Committee; Import and Export data from DGCIS, Kolkata

Actual capacity utilisation of the

textile machinery industry

(Value : Rs. Crore)

Installed                               Capacity

Year       Capacity               Production          utilisation

2004-05                6,100     3,705     61%

2005-06                7,000     4,402     63%

2006-07                8,048     5,753     71%

2007-08                8,048     6,155     76%

2008-09                8,048     4,063     50%

2009-10                8,048     3,415     42%

E=Estimated,  Source: Figures are taken and estimated as per recent survey of Textile Committee

Actual production, export & import of textile

machinery, parts and accessories

(Value in Rs. crores)

Years     Production          Exports                 Imports

2004-05                3,705     361         2472

2005-06                4,402     377         5065

2006-07                5,753     425         6884

2007-08                6,155     640         5255

2008-09                4,063     607         4411

2009-10 (E)          3,415     500         4500

E=Estimated, Source : Production figures are taken and estimated as per recent survey of Textile Committee; Import and Export data from DGCIS, Kolkata

Projections of production of Textile Engineering

Industry for the Eleventh Five Year Plan

(Value in Rs. crores)

Years     Exports Domestic             Total

Production

2007-08                575         3025       3600

2008-09                630         4070       4700

2009-10                700         5400       6100

2010-11                770         7130       7900

2011-12                850         9450       10300

E=Estimated, Source : Production figures are taken and estimated as per recent survey of Textile Committee; Import and Export data from DGCIS, Kolkata