Exposition of Shri Prakash Bhagwati , Chairman of TMMA

This Views is based on the candid of Shri Prakash Bhagwati Chairman Textile Machinery Manufacturers and the interview he gave to the representative of this magazine – V. Y. Tamhane, Editorial Advisor.

At the seminar organized by FICCI [Federation of Indian Chambers of Commerce and Industry] at Ahmedabad, on measures for stimulating investments in the manufacturing sector, Shri Prakash Bhagwati, Chairman, Textile Machinery Manufacturers Association was forthright on emphasizing the importance of Textile industry in the national economy. He added that it was sufficient to refer to just three factors for the purpose, namely, creation of lakh of jobs with minimal qualifications at entry level, earning of sizeable quantum of foreign exchange and capability to meet growing domestic demand of demographically young.

However, the textile industry does not possess any magic wand. It does require support and the major support is extended by the Textile Engineering Industry. In the days of high technology the winner must have [equipment which are] sophisticated, most modern highly productive and capable of producing fault-free and quality goods. There is a fierce competition in the international market for textiles which cannot be overlooked. At the same time, the traditional major players namely China and European countries are losing their grip on the textile market. Their decline is the cumulative effect of many factors, but the rising manpower cost.

Shri Bhagwati was critical of the reduction in the allocations of funds for TUFS, which caused heavy backlog of arrears and left the textile industry starling. Unless on time, TUFS benefits were made available, he categorically pronounced that the investment in the industry might dwindle. The speed of disbursement of interest subsidy was an important factor influencing the level of investment.

Continuing his address, Shri Bhagwati stated –

  • It is envisaged in Draft Textile Policy “Vision 2024-25” that domestic sale of textile industry should reach a production level of US$ 350 billion. Further, India has the potential to export textile & apparels worth US$ 300 billion by 2024-25 from its current level of US$ 40 billion. Thus the size of the industry should grow to US $ 650 billion by 2024-2025.
  • This would maximise employment generation and value creation within the country. In the process, investment of about US$ 120 billion would take place and about 35 million additional jobs would get created.

[Textile Engineering Industry]

  • The TEI in India is one of the five key capital goods industries
  • Consists of more than 1400 units, with a total investment of Rs. 9,100 Cr
  • More than 80% of the units are SMEs
  • Installed Capacity of TEI, is Rs. 10,500 Cr
  • Provides direct / indirect employment to > 285,000 persons
  • Meets 45-50% of the demand of the Indian textile industry

While giving the reasons for high import of Textile equipment, he referred to the following factors:

  1. User textile industry is highly fragmented.
  2. Slow modernization as user industry is not subject to global competition.
  3. With regard to spinning sector, TEI has no technology gap and is able to offer spinning equipment of world class quality.
  4. However, for weaving and processing sectors, TEI is focusing more on customers who are in unorganized sector. As a result, wide technological gaps exists. Even used imported weaving machines are preferred over new low tech weaving machines, produced locally.
  5. Gaps in technology as stated above have forced organized textile industry to go for high import of modern equipment enabling them to compete in export market.

Long term strategy for indigenous development of technology for equipment to be “Made in India” related to weaving, processing and garmenting where technological gaps exist.

In order to reverse the trend of import in favour of local supply of equipment to textile industry, following measures are suggested. New policy measures should encourage local as well as foreign direct investment in textile engineering industry.

  • Cluster approach for development through institutional linkages like IIT-Delhi &Powai, CMTI should be encouraged by government (DHI) for machines and components, as identified above.
  • TMMA has been able to organize on similar line as stated above, a suttleless loom development project between 5 of its member units with Central Manufacturing Technology Institute(CMTI), Bengaluru. DHI will fund, 80% of the project cost.
  • Creating Technology Acquisition Fund: Textile Industry and TEI is migrating from Europe to Asian countries. This has resulted into reputed manufacturers of textile equipment closing downin Europe. Their technology can be acquired from earmarked funds, either for individual Indian unit or for Clusterof TEI Units.
  • Import should be permitted at zero or nominal rate of duty for a period of 3 years. After this timeframe, duty should be raised to 15%. This will facilitate Indian sector to acquire new, technically superior machinery at reasonable costs and also signal foreign machinery manufacturers to invest in India.
  • TUF scheme should not be changed for 10 years period. Allocation of funds for TUF in respective yearin the central budget should be made in consultation with industry.
  • In order to promote investment in textile machinery manufacturing it is recommended that incentives under Scheme of Hire Purchase and TUFS in specific segments should be made available only on indigenous machinery after period of 3 years. This will give sufficient time for international and Indian investors to join hands or make independent investments for manufacturing machinery within India.
  • At present TUFS benefits are not available for second hand machinery except specific shuttleless looms. In order to promote usage of latest technology machineries and promote machinery manufacturing investments it is recommended that import of second hand machinery should not be encouraged except in case of select technical textile and nonwoven machinery.
  • RRTUF Scheme.-Benchmarking of only domestic loom manufacturers should be removed. This is an injustice.
  • Introduce Scheme Similar to TUF – For modernisation of (Textile Engineering Industry)TEI.
  • Inverted Import Duty Structure  :

Existing customs tariff on Textile machinery and components are inverted in nature‐ import of complete machinery attracts 5% basic customs duty in general while raw materials and number of components attract an average duty rate of 7.5% and above. For promoting indigenization of machinery manufacturing, basic duty of complete machinery should be at least 5% higher than on inputs. It is recommended that a detailed exercise should be carried out to assess whether the import duty on the raw material needs to be decreased or import duty on complete textile machinery need to be increased to maintain this differential.

The likely contours of the new Textile Policy is available from the unanimous Report of the Export Committee constituted by the Ministry of Textiles under the Chairmanship of Shri Ajay Shankar, Member-Secretary with the captains of the textile industry as its Members. This would open tremendous opportunities on unbelieveable scale.

Shri Bhagwadi was hopeful that on the strength of four inherent factors, assured domestic availability of good quality cotton, availability of skilled workers with the help of skill development programme of Central Government, Joint agreements for the use of international brands and improved Per capita domestic consumption to 30 meters , the steep climb of the textile industry from the present production of US $ 120 billion to the pinnacle of US $ 650 billion over a period of ten years, provided adequate Government support was available.

With immense proud he recalled the initiative of TMMA in collaboration with the Ministry of Heavy Industry to launch the Central Machine Tools India Project, under which Five Machinery manufacturers had been selected on the basis of their present commitment for R and D.

With the technology support from Machine Tool institute based at Bengalaru, and financial support of 80% of the project cost by the Central Government and 20% of the project cost being  R and D expenses borne by the selected manufacturers, the day is not far off when Indian-manufactured state-of-artshuttle-less looms would become functional.