The Hindu Business Line : Removal of age restriction for used machinery imports — Textile sector smiles, machinery makers frown

THE removal of vintage restriction for import of used capital goods under the new national foreign trade policy (NFTP) unveiled on Tuesday by the Commerce Ministry will cheer the investors in the textile weaving industry. The move meets one of their long-pending demands for scrapping the restriction on age of the second-hand looms being imported.

But it is sure to dampen the enthusiasm of the indigenous textile machinery manufacturers who have, of late, shown some interest in developing a technologically upgraded version of rapier looms within the country.

The decentralised weaving industry represented by the powerloom weavers has been strongly lobbying for quite some time with the Centre to relax the import norms stipulated for second-hand weaving machines, especially with regard to the age/vintage of the models of the looms. The reason being that the Government's age ceiling of 10 years for used weaving machinery models had hindered the weaving industry's efforts to increase the number of shuttleless looms in the country in the absence of an equivalent indigenous loom manufacturing facility in the shuttleless rapier/projectile loom segments. Relaxation of the import norms will give them access to cheap capital under the textile technology upgradation fund (TUF) scheme and subsequently lower investment costs as well. A couple of years ago, the Union Government relaxed the norm and allowed a one-time special import scheme (under the negative list). This model-specified import scheme enabled powerloom weavers to import 10,000 weaving machines of TW-11 and PU models whose vintage was more than 10 years old with a minimum residual life of 10 years. Apparently, many took advantage of this and imported close to 7,000 looms, though the rush of second-hand loom imports then also led an increase in the prices of the second-hand imported machines by the middlemen and agents.

Having managed to secure the Government's nod to their demand for removing the vintage restriction, the powerloom weavers will now be anxious to see whether the total dismantling of the vintage norms for the second-hand looms will also bring the used machinery under the textile technology upgradation fund scheme (TUFS).

The user industry too will be keen to know whether these second-hand looms would be allowed under the EPCG scheme route to get the duty-free benefits as well.

It will certainly be a windfall for the weaving segment if these two benefits are bestowed.

According to industry sources, the vintage norm relaxation would now precipitate the new investment climate among the spinners especially those seriously seeking to enter into cloth production using their in-house yarn production.

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