The depreciating rupee may have benefited textile exporters, but the debt-laden industry’s expansion plans are hit by the same falling currency, as costs of importing textile machinery have shot up.
In the financial year ended on March 31, imports of textile machinery stood at Rs 5,400 crore, down by 12 per cent from the year before. The rupee depreciated 14.11 per cent during the year.
In 2010-11, many textile companies, seeing a temporary revival in the economy, did spend heavily on importing machinery. During the year, textile machinery imports saw a sharp rebound and imports at Rs 6,150 crore. In 2009-10, textile machinery imports stood at Rs 4,250 crore. “The current situation has again dampened interest in machinery investment,” said R S Bachkaniwala, chairman of India International Textile Machinery Exhibition Society.
Falling rupee was one major hurdle, say industry experts. India’s textile industry has been wary of investing in expansion and textile machinery, also because of the current economic slowdown and the prevaling crisis in advanced economies, which has had an effect on demand for textile products.
This was also evident from the poor response to the the Technology Upgradation Fund Scheme, which was extended last year, where subsidies worth only Rs 200 crore was given in the last financial year, of the total subsidy outlay of Rs 1,972 crore.
Although last year's imports were not as low as in 2009-10, the sector is still cautious about investing in machinery. “The sector is currently waiting for more stability in the Indian economy as well as other major economies to start investing in textile machinery,” said S Chakraborty, secretary, Textile Machinery Manufacturers Association.
