This Monday, February 26, 2007 at 0000 hrs Print  Email NEW DELHI, FEBRUARY 25 :

With the Union Budget just two days away, divisions have emerged between the textile industry and the allied machinery segment on the issue of import duties on second hand textile machinery.

While the domestic textile engineering segment (TEI) has been demanding an increase in import duties, the user industry has been in favour of lowering duties further alleging that the engineering segment has not kept pace with the rapid growth in the textile sector in the post quota scenario.

“The machinery manufacturers did not expand in advance and hence were not prepared when the textile sector witnessed a turnaround in the post quota period. TEI was sceptical about the prospects of growth and it will still take a few years for them to expand capacities,” said Confederation of Indian Textile Industries secretary general D K Nair adding that European machines are too expensive to be imported and Chinese machines have quality issues and hence import of second hand machines is on the rise.

TEI on the other hand believes that the low import duties are robbing them of the market and their products are not able to compete with second hand machines from Europe, China and Thailand. “There are some machines whose imports are encouraged on a concessional duty so much so that the same machine when manufactured by the domestic industry is taxed at a higher rate. Further, most of the components also attract a higher rate of duty,” said director of Himson Textile Engineering Industries R S Bachkaniwala. The excise duty on most textile machinery items is 16 per cent while import duty for most of the machines is in the range of 5-7.5 per cent.

The textile sector has been on a phenomenal growth trajectory in the last two years. “Barring few players like Lakshmi Machine Works in the spinning segment, there is a huge scarcity of machines in the country and the industry suffers from lack of funds. As such the textile sector has to rely on imports,” said a textiles ministry official.

The machinery manufacturers admit as much. “We have not been able to attract large scale investments — domestic or foreign — but are hopeful things will improve soon. There are some supply constraints,” said Textile Machinery Manufacturers’ Association secretary S Chakrabarty.

With the commerce ministry supporting the textile industry lobby, import duties are not likely to go up. But the chasm between the two lobbies will only increase. “Its unfortunate that the same textile industry whom we served for so long is now not supportive of our industry,” said Veejaylakshmi Engineering director D Ranganathan.

Source:CCPIT TEX