2019 in review: The year that was

The production of the Textile Engineering Industry (TEI) recorded a decrease of 1 per cent viz. Rs 6,865 crore in 2018-19 as against Rs 6,900 crore achieved during 2017-18.

As the country geared up for the General Elections in 2019, industry, institutions and the general public witnessed heightened expectations and aspirations, which peaked towards the second half of the fiscal year 2018-19. The promises made would have to wait for the announcement of the Union Budget after May 2019.

Industry came to the terms with the twin fiscal reforms of demonetisation and the implementation of GST in 2016 and 2017 respectively. The textile and the textile engineering industry, in particular, observed further consolidation of business, specifically in the powerloom and processing segments in the decentralised sector. Majority of the companies in these segments lost their competitive advantage to the cheap imports from China and other Southeast Asian countries like Thailand, Vietnam, Taiwan and Singapore. The import of new textile machines, or refurbished machines sold as brand new, increased at an alarming rate.

The Government through the GST Council made several attempts in correcting the GST slabs, and making GST more user-friendly by giving concessions for its speedy implementation since inception. Industries in the organised sector, including those in the textile and textile machinery businesses were able to gear up to the administrative obligations of the GST rules.

The implementation bottlenecks of the ATUF Scheme perhaps became boon in disguise for the domestic textile machinery industry. The enlisting process in the scheme of any machinery manufacturer or its dealers was equally difficult for both the Indian and overseas companies in terms of documentation required by the office of the Textile Commissioner (OTxC). However, the impact on foreign companies was severe due to lengthy processes involved through the government offices of two or more countries. In our estimation, this dampened the imports of textile machinery by 20-30 per cent.

The Office of the Textile Commissioner, taking a cue from the Government’s desire to be more industry friendly, was cooperative in terms of knowledge sharing and providing guidance on applications, although the change of guard at the decision-making level made delayed enlisting names of the machinery manufacturers and dealers in the ATUF scheme. Whilst the country improved its global ranking on ‘ease-of-doing Business’, unfortunately, the members were not able to experience this. This challenge offered opportunities to the Association in enhancing its interaction with the industry, government and the academia. It was able to recommend corrective measures and bring out suitable government circulars pertaining to all stakeholders on the ATUF enlistment process. TMMA expects the process to be expedited in the coming quarters for the benefit of the industry and economic growth.

During the year the association also took initiatives in putting forward proposals for “Incentives for Commercialisation of the Indigenously Developed and Acquired Technologies from Overseas”, to the Ministry of Textiles and Ministry of Heavy Industry & Public Enterprises. The main purpose was to support the domestic research and development and joint ventures under the ‘Make in India’ initiative of the Government of India to become commercially competitive not only in the domestic but also in the export markets. Both the ministries took the proposal positively, and the association is quite optimistic of a suitable scheme in the coming fiscal year.

The last fiscal year 2018-19 was an eventful year and the Association has exciting plans to ensure that it continues its work for the growth and prosperity of its members.

Production, exports, and imports

The production of the Textile Engineering Industry (TEI) recorded a decrease of 1 per cent viz. Rs 6,865 crore in 2018-19 as against Rs 6,900 crore achieved during 2017-18. The decline in production of spinning machinery was responsible for this decrease. It is expected that spinning machinery sector might increase its production during 2019-20. In weaving sector particularly, the shuttleless loom category, the growth rate was stagnant due to uncertain situation created by the unfavorable procedures under the ATUF scheme as well as adverse situation in the powerloom sector arisen because of the cash business. Synthetic filament yarn sector also recorded a marginal increase in production while the processing sector got a significant increase due to export. In fact, many of the processing machinery manufacturers did well during the first half of the fiscal gone by.

The export of textile machinery to the third-world countries increased during the year. The Association made efforts in helping the TEI to increase its exports further during the year. On the basis of the data furnished by the Directorate General of Commercial Intelligence & Statistics (DGCI&S), Kolkata, the estimated export performance during 2018-19 rose to Rs 3,665 crore as against Rs 2,939 crore achieved during 2017-18.

Based on anecdotal information reported by members of the TMMA, the increase in the imports might be due to improper HS Codes used by the importers. Several incidences were reported to the Association by members of imports of used machines refurbished-as-new machines, including low-cost, low-tech shuttleless looms using old technology imported from China in large numbers.

In the preceding years, TMMA used to procure the export and import data from two sources, viz. DGCI&S and the private source, to analyse the export and import trends of textile machinery and spare parts. However, due to non-availability of data from the private source after November 2016, the data procured from only DGCI&S could be evaluated. The association did procured six months daily transaction data from another private source on unofficial basis during the last fiscal year. The accuracy of the data is being validated against other sources.

TMMA requested the concerned ministries/departments on several occasions directly and through DHI to continue the publication of daily lists of imports and exports, by highlighting the benefits of publishing the data. In the absence of such data, no assessment can be made on the import of different makes and model of textile machinery particularly machinery which may be second hand using outdated technology.

Based on a survey report done by the Textiles Committee with support of TMMA in 2007, and the import and export data analysed in subsequent years, the domestic share of demand of the TEI shows a downtrend.

The estimated capacity of the domestic TEI stood at Rs 11,000 crore in 2018-19. The production was Rs 6,865 crore as against Rs 6,900 crore during the previous year; due to decrease in the capacity utilisation from 63 per cent to 62 per cent. The increase in exports reduced the domestic supply. In other words, lack of domestic demand forced the manufacturers to focus on international markets.