In it's pre-Budget memorandum to the government, the Federation has also suggested there should not be any excise duty on textile machinery. ``In order to improve demand for textile machinery and in line with the recommendations made by Sathyam Committee excise duty on textile machinery should be withdrawn. The cost-efficient modernisation badly needed by the industry is possible only if the exemption is given,'' FITEI co-chairman and chairman of Textile Machinery Manufacturers' Association (TMMA) R Santharam said. The textile machinery industry holds large-scale import of used textile machinery prior to April '99 largely responsible for the demand recession the industry faces today. According to FITEI, the share of the indigenous industry touched a low of37 per cent during 1998-'99 against 82 per cent it commanded in 1991-'92.

High cost of production due to distortion in customs duty on imported inputs vis-a-vis duty on finished goods and other irrational tax structures for the local markets resulted in the downslide in the industry's fortunes, according to Santharam. FITEI reiterated it's demand for a 10 per cent margin between the customs duties applicable to imported finished goods and imported raw materials and components so that the indegenous manufacturers of capital goods could benefit from lower input costs.

According to Santharam, the industry's capacity utilisation hovers around 40 per cent. While the component manufacturing segment's capacity utilisation is around 50-60 per cent, that for weaving is a mere 30 per cent.

The industry's total production, including accessories, at current levels is estimated to be around Rs 4,000 crore a year and it claims to provide direct employment to 75,000 workers.

It is estimated that out of Rs 2,372crore worth domestic demand, indigenous manufacturers could grab orders to the extent of only around Rs 876 crore while imports stood at Rs 1,496 crore. Though the textile machinery industry has been complaining about poor level playing field, it is being blamed by user industries, especially the spinning and weaving segments, for not providing cost competitive state-of-the-art machineries. The foreign suppliers have taken advantage of the high cost and technology gap which prevails here, industry sources claim.

``There are no volumes. It will not be economical for us. We are not against imports of machineries which are not produced here,'' whole-time director of textile machinery major LMW and past chairman of TMMA R Venkatarangappan said when asked why the Indian machinery industry failed to meet requirements of user industry.

A week back Powerloom Development and Export Promotion Council (Pdexcil) had claimed imports of used textile machineries would help the cash-strapped industry modernise more costefficiently since such imports were cheaper by more than 60 per cent.