Rationalization of 2nd Hand Machine Import in Capital Goods Industry

Import of secondhand shuttleless looms in the textile industry, challenges faced by Indian manufacturers, reduction in import due to revised policies, and development of low-cost technology in India.

• Import
• Secondhand Machines
• Capital Goods Industry
• Textile Machinery
• Technology Development

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1. TEI PERSPECTIVE RATIONALIZATION OF 2ND HAND MACHINE IMPORT IN CAPITAL GOODS INDUSTRY Mr. J. Anand Vice Chairman, Textile Machinery Manufacturers Association (INDIA) DHI and Capital Goods Industry Meeting 30th September, 2014, Udyog Bhavan, New Delhi

2. OVERVIEW of DOMESTIC PRODUCTION & IMPORT - WEAVING Import of secondhand shuttleless looms started in a big way after the liberalization of trade and industrial policy of the Government. Since year 2000, only 1,50,000 shuttleless looms installed till date. It took more than 20 years for textile industry to do so. Whereas China has installed 7,50,000 shuttleless looms within the last 10 years. The revised policy of the Government has reduced the import of secondhand shuttleless looms in the country Imposition of higher duty for secondhand machines Reduction of subsidy under TUFS-30% CLCS for the second hand machines Off late import of secondhand shuttleless looms have dropped to 22% during 2013-14 from the level of 82% during 2011-12. Indian manufacturers successfully developed and installed low-cost basic technology shuttleless rapier looms in the country. 2

3. TEI IMPORT DATA INCLUDING USED MACHINES 2008-09 2009-10 2010-11 2011-12 2012-13 HS CODE Total Used Total Used Total Used Total Used Total Used 8444 208.69 5.15 239.03 5.55 112.47 2.37 116.67 3.65 635.94 13.53 8445 1857.16 193.39 1272.57 284.87 1914.69 187.78 2923.61 161.18 2602.97 135.12 8446 803.52 290.93 1068.52 418.63 1510.19 597.53 1694.90 565.75 1937.01 410.59 8447 127.8 432.48 96.91 237.02 84.17 366.77 54.44 258 112.18 8449 23.21 0.92 18.03 3.6 77.77 1.84 178.15 9.95 195.95 13.27 8451 1050.25 38.85 782.53 64.74 909.52 60.78 927.87 51.56 872.14 45.98 Total 5343.04 657.04 5342.94 874.3 6326.36 934.47 6882.46 846.53 7500.83 730.67 * 8446 Weaving Machines 3

4. IMPORT OF SHUTTLE LESS LOOMS *(Source: Private) Loom Import 2008-09 2009-10 2010-11 2011-12 2012-13 Value (Rs. Cr) Value (Rs. Cr) Value (Rs. Cr) Value (Rs. Cr) Value (Rs. Cr) No. No. No. No. No. 1138 110.97 1607 164.36 154 11.9 219 225.54 4829 476.82 New Rapier 507 127.46 692 225.12 1765 404.15 226 54.86 2790 774.7 New Air Jet New Water Jet -- -- -- -- -- -- 1130 67.03 1991 147.82 New Projectile -- -- -- -- -- -- -- -- 17 5.58 Total (1) 1645 238.43 2299 389.48 1919 416.05 1575 347.43 9627 1404.92 Used Rapier 548 38.63 2644 164.44 3719 249.07 3637 290.78 2352 227.99 Used Air Jet 153 12.08 900 324.66 1062 57.92 1311 104.58 484 41.48 Used Water Jet 246 6.63 1474 96.37 1497 49.38 447 17.25 141 6.77 Used Projectile 407 32.71 2060 307.06 2161 15.65 1624 144.97 1428 115.25 Total (2) 1354 90.05 7078 892.53 8439 372.02 7019 557.58 4405 391.49 Grand Total (1+2) 2999 328.48 9377 1282.01 10358 788.07 8594 905.01 14032 1796.41 Used Loom % 45% 75% 81% 82% 31% 4

5. INDEGENOUS SHUTTLELESS LOOMS TYPE SPEED (rpm) Remarks Already installed - over 8000 nos 180 to 275 rpm 350 rpm RAPIER 400 rpm Unable to compete with imported new & secondhand shuttleless looms 600 rpm 800 rpm AIRJET WATER JET 800- rpm 7

6. IMPORT MATTER OF CONCERN Dual Subsidy on Imported Looms - Firstly, an export subsidy by the Chinese Government and Secondly TUFS offered by the Indian Government No benchmarking applicable to imported machines Second hand imported machines are often accompanied by unscrupulous trade practices (over invoicing, non-existent or insufficient after-sales services and recycling of used parts and components, sometimes, even entire machines). Of late lot of Second hand machines are refurbished and imported in the disguise of new looms. 8

7. TEI PROPOSAL FOR POLICY INTERVENTIOAN No incentive for import of secondhand machinery in the form of Subsidies under TUFS or concessional import duty against export commitments Introduce import duty on second hand machines similar to Automobiles sector Only secondhand machines of 5 years vintage may be allowed for another period of 3 years Only the old shuttleless rapier looms which are capable of working at a minimum speed of 400 rpm should be allowed. Benchmarking should be introduced for imported machines as well. 9

8. AUTOMOBILES IMPORT CASE STUDY Overall import duty on new/ used automobile is more than 100%. Relevant sources: http://www.cybex.in/indian-custom-duty/Motor-Cars-Duty-Calculator-87032391.aspx https://sites.google.com/site/secoshippingservices/services/imports/import-of-used-motor- vehicles-to-india https://in.answers.yahoo.com/question/index?qid=20080903084223AALaVgO 10

9. Thank You 11