The EFTA opens up additional market opportunities in India

The Swiss Textile Machinery Association is the representative body for Switzerland’s producers of textile equipment, systems and services. Currently 44 companies are affiliated, including manufacturers of machines and components, and service providers, for the textile industry. The companies offer solutions covering the entire textile value chain, from spinning to weaving, knitting, finishing, embroidery and quality control. Cornelia Buchwalder, Secretary General of Swiss Textile Machinery, in this interview with Rakesh Rao, elaborates on the collaborative efforts between India and Switzerland in advancing the textile industry. She also discusses the potential impact of the recently signed European Free Trade Agreement on strengthening these ties.

How has the Indo-Swiss trade relationship in the field of textiles grown over the years? How have players in the textile value chain of the two countries mutually benefited from this relationship?

India has always been an extremely important partner for Switzerland. In previous years, it was always in the top 5 export markets for Swiss textile machinery manufacturers. In the last two years, however, India has become number two, with only China receiving more exports from Switzerland. There are Swiss manufacturers along the entire textile value chain. From spinning to winding, weaving, knitting, nonwovens, finishing, quality control and embroidery. Our country has been a world champion in innovation for many years, which pays off when it comes to finding creative solutions to challenges. Both sides benefit equally from this in Indian-Swiss cooperation along the entire textile value chain.

Recently, India signed a trade agreement with the European Free Trade Association (EFTA) countries. How will this agreement help in growing Indo-Swiss trade in the field of textiles?

In general, it can be said that Swissmem and its industry sector Swiss Textile Machinery welcomes the conclusion of the free trade agreement with India. It significantly improves the competitiveness of the Swiss tech industry in this important growth market, as customs duties of up to 22 per cent will be eliminated. This applies in particular to competitors from China, the EU and the US, which have not yet been able to conclude such an agreement. The FTA opens up additional market opportunities in India. This will also benefit SMEs that do not have the opportunity to set up local production facilities. As the details of the agreement are not yet known and it has yet to be ratified in all countries, it is still too early to determine its impact. However, the reduction in customs duties and increased direct investment will make relations more attractive for both sides.

Also, will this agreement lead to increase in investment by Swiss textile machinery players in India?

The Swiss tech industry exports almost 80 per cent of its goods and services. For the textile machinery industry it is close to 100 per cent of export. The industry is dependent on access to global sales markets that is as barrier-free as possible. The domestic market is far too small to ensure the continued existence of tech companies and their 330,000 jobs in Switzerland. Free trade agreements are therefore of central importance. They enable customs barriers and non-tariff trade barriers to be dismantled. As a result, Swiss export companies gain competitiveness in the respective sales markets. This opens up new market opportunities and secures jobs in the export industry and its countless suppliers in Switzerland. At the same time, closer trade relations lead to the expansion of the local presence of Swiss companies. Swiss tech companies already employ over 570,000 people abroad. India in particular, with its great potential and enormous market, can count on a strong increase in local Swiss investment if the framework conditions are favourable. The free trade agreement thus creates a win-win situation.

Sustainability and circularity have gained importance globally. How are Swiss textile machinery companies helping their customers to achieve their green goals?

Regarding sustainability, it is and stays a big and very important topic. It has been for years, but now it is even more important due to the new EU strategy for sustainable textiles. Among other things, efforts continue to be made to ensure that less energy, water and chemicals need to be used to achieve the same results. When it comes to circularity, it is extremely important to develop the fibre production process. This is because one of the challenges of mechanical recycling is the short fibres, which leads to complexity in the spinning process. As Switzerland is a leader in this field of the textile machinery industry, it can offer a wide range of solutions. However, the standard for recycled fibres, for example, also needs to be defined, and Switzerland plays a major role here too.

India has set a target to increase its exports of textile products to $ 100 billion in the next 4-5 years. How can Swiss textile machinery companies help them in this journey?

As mentioned above, the free trade agreement has come at just the right time, so that both India and Switzerland can benefit. By eliminating customs duties, India can purchase Swiss textile machinery at more favourable conditions and thus equip its production with first-class, state-of-the-art machines. In addition, possible further direct investments will expand capacities in the country. Both will help to support the expansion of the Indian textile industry.

What emerging trends in the textile machinery arena?

Unsurprisingly, the most important topics for our industry, both for textile and textile machinery manufacturers, are the following: Sustainability including recycling, digitalisation and automation. These topics have been present for some time, but will remain central in the coming years. In this sense, the emerging trends are also the trends of today. This is why the innovations and further developments of machines and services also revolve around these topics.

How was the performance of Swiss textile machinery in 2023? What are your expectations from 2024? (And what role can India play in driving demands for Swiss textile machineries)

2023 was a difficult year for the Swiss textile machinery industry. Exports fell by a good 15% compared to the previous year. Exports to all major markets fell, with the decline in the two most important export markets of China and India being particularly significant. Two export markets that bucked this trend were Uzbekistan and Brazil. A trend reversal is not in sight for 2024 until the end of the year at the earliest, although the decline has slowed statistically. Cautious optimism is therefore justified. India has an important influence on the recovery of the Swiss textile machinery industry, as it is the second most important export market and many of our companies already have branches, production facilities and service centres in India. Therefore, India’s demand for investments in textile machinery will be an important pillar for the strengthening of our industry.