Article >> TEI and Import of Second Hand Machineries in India

TEI and Import of Second Hand Machineries in India

 

By

S. Chakrabarty, Secretary General

Textile Machinery Manufacturers’ Association (India)

 

Status

 

Over the period of last 6 decades, the Textile Engineering Industry (TEI) had built up an annual estimated capacity of over Rs. 9,000 crore of complete machinery and other equipment, right from opening up of the fibres to the production of finished fabrics with an investment of Rs. 7,500 crores. There are 1,446 units, 598 units manufacturing complete machinery and 848 units making parts and accessories.   More than 80% of the units are SMEs. It provides employment directly or indirectly to > 250,000 people (based on the survey of the Textiles Committee).

 

It is needless to mention that since inception the TEI has been contributing greatly to the competitiveness of the Indian Textile Industry (TI) whose main constituent is ginning, spinning, weaving and processing. Though garment and knitting sectors made their progress during 1980s onwards, due to the SSI reservation policy of the Government the machinery manufacturing for the same by the domestic companies did not take place.

 

Data on the Textile Engineering Industry

Production 

The production of textile machinery has been suffering from demand recession over the last few years.  It has adversely affected the growth of the TEI significantly.  The capacity utilization of the industry which increased during 2004-05 to 2007-08 has fallen in the subsequent years due to demand recession. A turnaround has happened during 2010-11 with a positive growth of 45% over 2009-10. But it was short lived and there has been a fall in production during 2011-12 to the extent of 14%.

 

 

 

 

Value-wise actual production data of different categories of the industry during the last five years was as under :    

                                                                                    (Value in Rs. Crores)

Category

2007-08

2008-09

2009-10

2010-11

2011-12 (P)

Spinning & allied machines

3662.22

 2417.44

2105.00

3500.00

2570.00

Synthetic filament yarn machines

  625.30

 412.79

 830.00

  900.00

 925.00

Weaving & allied machines

  621.64

 410.35

 495.00

  600.00

  480.00

Processing machines

  635.19

 419.29

 460.00

  700.00

  750.00

Misc. (spinning, weaving & processing) machines

  185.26

  122.00

 120.00

   50.00

  100.00

Textile testing & measuring instruments

  121.86

    80.43

   30.00

   50.00

    65.00

Hosiery machines/ hosiery needles

    50.46

    33.31

    35.00

    50.00

    20.00

Total of machinery

5901.93

3895.61

4075.00

5950.00

 4910.00

Spares & accessories

 253.07

  167.39

  170.00

  200.00

   370.00

Grand total

  6155.00

  4063.00

4245.00

6150.00

 5280.00

% Increase/decrease

+7%

-34%

+4%

+45%

-14%

P= Provisional

 

 

 

 

 

       

Demand

 

Demand as per the survey of the Textiles Committee for textile machinery from 2007-08 to 2011-12 was as under:

                                                                (Value in Rs. Crores)   

 

 

 

         Year

 

 

Production

less

exports

Imports

less parts

imported by

machinery

manufacturers

 

 

Total

indigenous

demand

% share of

demand

met by

indigenous

industry

2007-2008

5456

4332

9788

56

2008-2009 

3402

3802

7204

47

2009-2010

3663

3720

7383

50

2010-2011

5235

4077

9312

56

2011-2012 (P)

4480

6708

11188

40

 

 

 

 

 

 

 

 

 

 

 

 

 

Export of Textile Machinery 

     Year

Value in Rs. Crores

  2007-2008

699

  2008-2009

661

  2009-2010

582

  2010-2011

915

  2011-2012 (P)

800

                 P = Provisional

 

Import of second hand machinery

 

  • Import of second hand machinery is varying from Rs.700 to Rs.900 crores per annum.  In respect of the spinning, weaving and processing sector, the average import of second hand machines in totality varies from 12% to 18%.  While in weaving, it is almost 40% by value and 80% in numbers.  The details of import of new and second hand machinery are below.

 

                         

 

 

 

 

SUMMARY OF IMPORT DATA DURING 2007-2008 TO 2011-2012

 

                                                                                                      (Value in Rs.Crores)

 

Heading

2007-2008

2008-2009

2009-2010

2010-2011

2011-2012

 

Total Import

Second Hand

Total Import

Second Hand

Total Import

Second Hand

Total Import

Second Hand

Total Import

Second Hand

8444

94.26

4.93

208.69

5.15

239.03

5.55

112.47

2.37

116.67

3.65

8445

2628.9

283.36

1857.16

193.39

1272.6

284.87

1914.7

187.78

2832

161.2

8446

1105.7

420.64

803.52

290.93

1068.5

418.63

1510.2

597.53

1560

565.8

8447

1166.4

76.29

1400.21

127.8

1797.3

96.91

1801.7

84.17

1347

54.44

8449

53.27

9.48

23.21

0.92

183.04

3.6

77.77

1.84

98.91

9.95

8451

105.77

46.44

1050.25

38.85

782.53

64.74

909.52

60.78

927.87

51.56

Total

5154.3

841.14

5343.04

657.04

5342.9

874.3

6326.4

934.47

6882.5

846.5

 

 

In spite of bad condition of the textile industry, approximately Rs.800 crores worth second hand machinery was imported in the country in spinning, weaving and processing sector, out of total import of Rs.6, 882 crores during 2011-12.  There should be a total ban on the import of second hand textile machinery.  Then only the demand for domestic machinery will pick up and that in turn will increase the Index of Industrial Production (IIP).

 

Besides the above, there is also an urgent need or to reinstate the import duty of 5% on shuttleless looms with the following description/specification.

 

1.      Rapier loom with weft insertion rate 700 metres/min

2.     Airjet loom with weft insertion rate 1350 metres/min

3.     Waterjet loom with weft insertion rate 1300 metres/min

 

This would prevent the import of cheap Chinese machinery, generate domestic demand and increase production.  These steps are immediately required.

 

(We do not discourage import of used machinery up to 5 years old for the manufacture of Technical Textiles and non-woven as such machinery in general are not made in India.  However, the item like glass fibre fabric, filter fabric, parachute fabric can be manufactured in our Rapier & waterjet loom.  Fishnet making machines are also made in India.  There are many other products which are made in Indian machines. )

 

It is needless to mention that our manufacturers have become successful to develop and manufacture Airjet Looms, Waterjet Looms and also high speed rapier looms. We should be proud of it that without any assistance from any corner these manufacturers spent their own resources to develop these items. But instead of helping them to manufacture and make further improvement, both the Government and the user industry continue their efforts to import the old used looms at cheaper price as low as 1.5 lakh to 5 lakh which is even cheaper than the raw material cost in India in the name of modernisation. This type of discouragement is unheard of in any developed country.

 

The user sector compares the prices of Chinese looms and praise China for the development of shuttleless looms; however they do not consider the fact that the China has stopped import of second hand machinery long back. They forced the European manufacturers to set their manufacturing establishment in China. As a result, today they are the largest manufacturer of Textile machinery in the world. But where are we? 

During the period of last three/four years TMMA and CII was representing to the Government to stop the menace of the used machinery import in the country. Our continuous efforts were successful to change the approach of the Government to some extent. But again the spoilsport is the User sectors who do not desire the indigenous development. They don’t understand one thing that today if the domestic manufacturers stop the production of whatever development they did, tomorrow the prices of all types of imported looms will go up substantially. It would be in the interest of the user sector that there should be a strong base of domestic machinery.

 

The data on import of shuttleless looms during 2007-2008 to 2010-2011 is given below:

                 

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 argument of the domestic user sector in favour of second hand shuttleless loom is that

1.     Indigenous machines are not good

2.     Domestic manufacturers are not capable of supplying the machinery

3.     Imported second hand machines are of better technology than domestic new machines

4.     The decentralised sector units are small and financially not sound enough to buy new machines for modernisation

 

Our reply is that

 

1.     What kind of modernisation is there with imported second hand machines and how much is it really helping to boost export of textiles. It is a matter of question.

2.     While the users are not buying the indigenous machines how bad are they? At the same time there are many unhappy users of second hand shuttleless looms and some have tried to sell their machinery also. There are both success and failure stories of used machinery.

3.     During the last 5 years about 30,000 shuttleless looms had been imported and almost 80% of them (i.e. 24,000) are second hand. There are almost 25 lakh looms in the country out of which only 1.10 lakh is shuttleless looms.

4.     If there is no import of second hand shuttleless looms for a period of 5 years it would not seriously affect the modernisation process of the user sector. At the same time, the domestic manufacturers will be encouraged to develop and manufacture better quality shuttleless looms as demand will increase. Further, the foreign manufacturers will be encouraged to come to India either through JV or FDI.

5.     Unless the domestic industry is protected against the onslaught of second hand and cheap machinery there is no future for them. At the same time the user industry will continue to depend on imported used machinery and make India the dumping ground of junk.

6.     This will jeopardise the growth of the domestic Industry and pull the IIP down in the long run.

7.     No further indigenous development will happen and there would not be any JV or FDI

1.         

 

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 collaborations are successful.  So long as the imported second hand shuttleless looms are freely imported and also 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/obsolete 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 development of the skill would be lost.

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