The Textile Industry, in general, in earlier years and the decentralized sector in particular, always preferred cheap used vintage machinery from abroad. The low level of technology was encouraged by the Government particularly in the weaving sector even under the TUFS. Cheaper imports from China are preferred. Even today the second hand shuttleless looms are imported in large numbers thus negating the possibility of any indigenous development of high-tech shuttleless looms.


During 2004-05, 2005-06 and 2006-07 was the boom period for the Indian textile industry. The industry did well and along with it the Textile Engineering Industry (TEI) also did well. Even 2007-08 was also good for the TEI. The Textile Industry made huge investments during this period which indirectly benefited the TEI.


The preference for the secondhand used machinery raised its ugly head during the preparation of the XI plan document when the Textile Industry demanded import of secondhand spinning machinery under subsidy under the guise of very high inflated requirement of modernization. Somehow the Government could take a decision not to encourage secondhand spinning machinery under subsidy for modernisation.


Import of Shuttleless Looms During 2007-2008 to 2010-2011

Items of Looms Imported

2007-08

2008-09

2009-2010

2010-2011


No.

Value

No.

Value

No.

Value

No.

Value

(Rs. Cr)

(Rs. Cr)

(Rs. Cr)

(Rs. Cr)

New Air jet Looms

1113

240.91

507

127.46

692

225.12

1765

404.15

New Rapier Looms

719

134.61

1138

110.97

1607

164.36

154

11.9

Second hand Air jet Loom

339

30.47

153

12.08

900

324.66

1062

57.92

Secondhand Rapier Loom

1801

170.92

548

38.63

2644

164.44

3719

249.07

Secondhand Projectile Loom

734

48.66

407

32.71

2060

307.06

2161

15.65

Second land Water jet Loom

536

16.63

246

6.63

1474

96.37

1497

49.38

Total

5242

642.2

2999

328.48

9377

1282.01

10358

788.07

Second hand loom import%

65%


45%


75%


81%


 

The import of second hand loom and cheap Chinese looms are the greatest hurdles for indigenous development. The average price of imported second hand water jet loom is not above Rs.3 lakhs. The second hand looms imported in the country are at least more than 10 to 15 years old. It is understood that subsidies are being claimed by manipulating the vintage of machines.


Similarly, TW11 model Sulzer Projectile loom is being imported in the country in large numbers. Production of these looms stopped in 1978 by the loom manufacturer in Europe. We are being burdened with decade old technology, which are giving less production, consumes more electricity with high maintenance. The same Company discontinued their PU model prior to 1990.


However, this machine is being imported and perhaps subsidies claimed. Same is the story for other shuttleless (Rapier) loom.


It is needless to mention that the import of second hand (used) machines and the cheap new machines from China is doing incalculable harm to the textile machinery manufacturing industry in India.


  • The statistics show that a large number of cheap weaving machines are imported from China under the TUFS. Similar technology, though available locally is not preferred.
  • Similar technology machines (shuttleless looms) are manufactured in the country and there are number of manufacturers with the capacity to produce 15000 shuttleless looms per annum while the average demand for such loom is not more than 10000 nos. per annum in general.
  • Thus the incentive (capital subsidy) provided by the Government is indirectly helping the Chinese manufacturers to market their product in India. These Chinese manufacturers are thus getting the subsidy twice. One from their own Government to export their product - another from Indian Government to market the same in India.
  • There is no benchmarking for these Chinese manufacturers no ISO Certification while our manufacturers are subjected to such compulsory practices.
  • As the benchmarking is forced on the Indian manufacturers, the principle of natural justice demands equal treatment to the Chinese machinery manufacturers or, the system should be done away with.
  • The Government thus indirectly created a barrier for the Indian manufacturers while the foreign manufacturers, specifically the Chinese, are enjoying at the cost of domestic manufacturers.
  • While every country is helping their domestic industry with tariff and non-tariff barriers for other countries, our country is just the opposite.


 

The second issue is the import of second hand machinery under the subsidy scheme. There appears to be no reason why it should be allowed under a subsidy scheme for modernization purposes, specifically when the Planning Commission in its XIth plan document recorded the same.


  • Any 5 year old machinery is normally good and capable of giving good performance. Therefore the same may be allowed for import but not under a subsidy scheme.
  • If the import figures are analysed, it will be found that average cost of second hand weaving machinery in general is approx. 5 lakhs. Why subsidy should be given to such machines which are already cheap?
  • As a matter of fact, subsidy under the modernization schemes should not be given to any second hand Shuttleless weaving machines. If this is done, perhaps it would be possible for domestic industry to compete even with the second hand weaving machinery imported without subsidy.


The Government desired that the Textile Engineering Industry should be able to manufacture latest generation hi-tech weaving machinery comparable to European technology. But the fact should be recognized that we are still at the infancy to develop such machinery. There is an urgent need for whole hearted support from the Government for the domestic industry and encouragement to FDI/foreign collaboration.


  • Today, whatever capacity was created for the manufacture of first generation Shuttleless Rapier loom is lying idle due to the indifferent policy of the Government as there is no protection from the cheap Chinese Looms.
  • There is no protection either from the imported second hand Shuttleless Rapier looms, air jet looms, water jet looms and also the projectile looms.
  • Whatever protection was there in the form of CVD also got reduced due to reduction of excise duty from 8% to 5%.
  • Excise duty on parts/components and accessories is 10% making them costlier and imported components are also costlier due to CVD of 10% and general import duty of 7.5%.
  • Apart from excise duty, there are many other duties and local taxes faced by the domestic manufacturers, the total of which accounts for more than 18% to 22% and to that extent we are uncompetitive.


What is happening is that-


Decentralized powerloom sector is continuing to import secondhand Shuttleless looms and cheap Chinese looms.


Even today a large number of plain looms (above 40000 nos.) are being installed per annum apart from the above.


The Government has now decided to allow semi-automatic loom under the Technology Upgradation Fund Scheme. There is practically no loom which technically can be termed as semi-automatic loom. This is actually the age old technology plain loom.

How the decentralised powerloom sector will be modernized with this loom that is anybodys guess.


This would put the large decentralized powerloom industry in obsolete mode and it would be practically impossible to modernize them.


Ultimate sufferer will be the garment industry and the textile exports in the long run.


  • Thus, there is need to provide assistance to the domestic Textile Engineering Industry either in the form of higher subsidy under the existing scheme or in any other form or manner as deem fit.
  • The excise duty on parts/components and accessories of textile machinery should be 5%.
  • The import duty on parts/components and accessories for the shuttleless looms should be nil.
  • Second hand machines should not be considered under TUFS.
  • Import of second hand machines older than 5 years should not be allowed.


These measures would not only make the domestic industry competitive but also create value addition and employment opportunities. It is a myth that the decentralised sector is not in a position to buy shuttleless looms costing above Rs. 10 lakhs as they do not have finance.


We need to invest for making very high-tech shuttleless looms. We have already developed Air Jet Loom (800 RPM), Water Jet Loom (800 RPM) and Rapier Loom (350 RPM). All the manufacturers expressed their helplessness to the fact that they cannot compete with second hand machines in general. We need to attract FDI/Foreign collaboration. We need to see that the existing foreign collaboration succeeds. So long the imported second hand shuttleless loom continue to be subsidized for modernization by the Government, none of the above would be possible and the country would continue to depend on age old technology and fail in its export performance. There would be no value addition and no contribution from the shuttleless loom manufacturers towards GDP. The opportunity to increase the employment and skill would be lost.



(This article reflects the personal views of the author)