Input cost of textile engineering industry rising: TMMA

The industry
members of the Textile Machinery Manufacturers’ Association (TMMA) India, expressed,
in its recently held 60th AGM, positive sentiments about the overall growth in
their respective businesses in the coming months. Majority of the companies
shared that after negligible business during first 2 quarters of 2020-21, they
have started getting orders being honoured by their clients. Both greenfield
and brown field projects are being negotiated with their clients these days.
Their capacity utilisation was close to 100 per cent and they would be able to
achieve up to 80-90 per cent of their annual turnover as compared to previous
year in the fourth quarter of the fiscal year.

However, the
industry showed serious concerns about the rising prices of the raw materials especially
steel. The order bookings which were closed at prices during April-May-June quarter
of 2020, are supposed to be fulfilled by Q3 or Q4 of the current fiscal. At the
time of booking the steel prices were 15-40 per cent lesser than the current
rates, therefore, the increased raw material cost is severely impacting the
basic cost of the machines to be supplied. A table below shows the change in
the prices of different mild steel and stainless-steel plates in the last 6
months.

Coupled with
increased fuel cost by 20-25 per cent between April 2020 to January 2021, the
prices of other commodities, transportation, material handling and
manufacturing have also risen.

There is
already restriction on the import of steel and other products due to MoS
circular that requires mandatory BIS certification of foreign companies. The
domestic steel producers are in a monopolistic scenario wherein they have been
dictating the prices. There are a number of high-quality Stainless-Steel
products which can’t be produced in India, but are required in very low
quantities. These restrictions are only putting more hurdles for domestic
machinery manufacturers to produce their machines at competitive rates and
qualities in comparison to their global counterparts.

For ‘Make in
India’ campaign to succeed, the government needs to be more pragmatic and be
open to the industry. The textile machinery industry expects an industry
friendly budget from the Government this year. A prudent monetary policy shall
take the growth trajectory of the Indian industry to the next level in the
years to come.

However, the
industry also articulated serious concerns that if the raw material prices
remains at same level or escalate further, the prices of the textile machineries
shall also increase at least 15-20 per cent with in the current fiscal year.