National Workshop on

Sectoral Perspectives & Initiatives: Creating an Enabling Framework for Stimulating Investments in Manufacturing organized by FICCI at Ahmedabad

29th May 2015

Textile &

Textile Engineering Industry (TEI)

Mr. Prakash Bhagwati Chairman

Textile Machinery Manufacturers’ Association(INDIA)

2

Textile & TEI: Most eligible industries for

“Make in India” initiative

With abundant availability of raw material, skilled work force, established

installed base “Textile Industry” has great potential to generate.

Jobs at highest level

Earn valuable foreign exchange by exporting high value added

textiles & apparel.

To meet growing domestic demand of demographically young India.

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To support Textile Industry, it is imperative to develop “Textile

Engineering Industry (TEI) ” which needs to undergo technological up-

gradation at accelerated rate.

Competition for both industries from China & European countries is

rapidly declining on account of several reasons. Rising manpower cost

being the prime factor. Change in circumstances offers golden

opportunity for more than double digit growth.

TMMA(I), 29th May 15 : PKB

3

An overview of

Textile & Textile Engg. Industry (TEI)

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 from the

current level of about US$ 100 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.

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.

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. 10500 Cr

Provides direct / indirect employment to > 285,000 people

Meets 45-50% of the demand of the Indian textile industry

* (Source: Textiles Committee Survey & TMMA)

TMMA(I), 29th May 15 : PKB

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Reasons for high import of Textile equipment rendering

poor domestic capacity utilization of TEI.

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.

TMMA(I), 29th May 15 : PKB

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Se

cto

r

Required know how

Ways to acquire know how / brands

Bu

ild

-up

an

d / o

r s

tre

ng

the

n

de

dic

ate

d R

&D

Ce

lls

at

IIT

D

elh

i,

Po

wai a

nd

CM

TI

We

avin

g

Acquire know how related to

Shuttleless looms (rapier >400 rpm;

air jet > 800 rpm; water jet > 800

rpm)

Attract FDI (Picanol, ITEMA) regarding air

jet, rapier technology to be produced

competitively in India

Indian OEM’s should initiate JV / M&A

discussions with Panter, SMIT & ITEMA

Contd..

Identified technology gaps & possible ways to

bridge them – GHERZI Report.

TMMA(I), 29th May 15 : PKB

TMMA appointed Gherzi Consultants, to identify technology gaps and

recommend how, such gaps can be bridged. Additionally, to develop an eco-

system, manufacturing critical high-tech components for supporting

production of new generation machine in TEI on sustained basis,

recommendations are also made in the said report.

6

Kn

itti

ng

Acquire know how related to:

a) High speed circular knitting

machinery (Micro-processors) and b)

Warp knitting

Indian players should evaluate M&A and/or

JV’s with EU OEM’s (mainly Italian & German

OEM’s)

Explore opportunities with Ningbo Yuren

(who is expanding fast) about manufacturing

in India

Bu

ild

-up

an

d / o

r s

tre

ng

the

n d

ed

ica

ted

R&

D C

ell

s a

t II

T

De

lhi,

Po

wa

i a

nd

CM

TI

Pro

ce

ss

ing

Acquire know how related to:

a) Environmentally sustainable

processing, b) High speed wide

width processing and c) Special

purpose processing and finishing

machinery (e.g. plasma-finishing)

Gherzi foresees also here several

opportunities for Indian OEM’s to tie up with or

take over EU producers (mainly Italian – there

are more than 50 SME’s)

Ind

us

tria

l/S

titc

hin

g

Acquire know how related to:

Hi-tech industrial stitching/sewing

machinery (lockstitch, overlock,

Cover stitch, bar tacking, pocket set,

button holes, etc)

Attract FDI (e.g. the remaining EU OEM’s:

Dürrkop, Pfaff; Necchi)

Identified technology gaps & possible ways to

bridge them – GHERZI Report.

TMMA(I), 29th May 15 : PKB

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Sr.

No

Name of the Item HS Code No.

1 Rapier Parts (Rapier tape, Rapier Head and Rapier Drive Wheel), Electronic

weft stop motion

84484950

2 CAM or CAM Beat up rapier loom 84484990

3 Weft feeders / Accumulators with or without electronic controlling

mechanism), weft selectors with programmer

84484950

4 Shedding motion

-High speed dobby mechanical or electronic(300 RPM and above)

-High speed dobby jacquard or electronic(300 RPM and above)

84481900

5 Electronic take up motion with servo motor control and Electronic let off

motion with servo motor control

84484990

6 Water Jet weft insertion system with water supply mechanism along with

electronic control and Profile Reed for Air Jet and Water Jet Looms

84484290

Contd..

Imperative to have an eco system to support

high tech machines, when produced in India

TMMA(I), 29th May 15 : PKB

8

Sr

No

Name of the Item HS Code No.

7 Compact Spinning Attachment 84483990

8 Automatic Yarn Splicers for Automatic Cone Winders 84483290

9 Spindle Motor for Automatic Cone Winders 84483290

10 Grooved Winding Drums for Automatic Cone Winders 84483290

Imperative to have an eco system to support

high tech machines, when produced in India

Import of above critical components should be at zero duty till

production of high tech weaving machine is established, locally.

TMMA(I), 29th May 15 : PKB

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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 organise a shuttleless loom

development project among 5 of our members and CMTI.

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 down. Their

technology can be acquired from earmarked funds, either for

individual Indian unit or for Cluster.

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.

Recommendations for speedy implementation

for bridging technological gaps.

TMMA(I), 29th May 15 : PKB

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TEI – ISSUES (TUF SCHEME)

TUFS – Policy with regard to TUFS for textile industry should be followed:

without any change for 10 years period. Allocation of funds in 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 TEI.

TMMA(I), 29th May 15 : PKB

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TEI – ISSUES (Inverted Duty Structure)

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

TMMA(I), 29th May 15 : PKB

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Thank You

Mr. Prakash Bhagwati Chairman

Textile Machinery Manufacturers’ Association(INDIA) & Chairman – InspirOn Engineering Pvt Ltd.