Budget 2006 is likely to provide sops to the textile sector in the form of a reduction in import duties for textile machinery.The ministry of finance is considering lowering import duty on textile machinery from the existing peak rate of 15 per cent after the ministry of textiles recommended the cut for the overall benefit of the sector. This is widely-expected to happen given the Finance Ministry’s inclination to bring down duties to the ASEAN levels.Currently, the industry is severely hampered by the shortfall of machines especially in the spinning segment as domestic manufacturers are not able to maintain a healthy ratio between demand and supply. The segment is currently valued at over Rs 4,000 crore with spinning machines alone accounting for Rs 1,500 crore.‘‘We have tried to make the finance minister realise that in the absence of substantial domestic production, import has to be encouraged and a duty cut is the ideal way to do that. It is still not clear to what extent the cut will be, but the finance ministry’s feedback to our recommendations are positive,’’ said an official in the textile ministry.The surge in exports—coupled with the investments that are pouring in—has been cited by the textiles ministry while advocating the duty cut. Investments worth Rs 140,000 crore are expected by 2010, 50 per cent of which will be in machinery alone.‘‘We were champions in the spinning segment until recently but now we are facing huge backlog with delivery time running as high as 12-18 months. The Budget should make provisions so that the shortfall is met,’’ said Confederation of Indian Textile Industry Secretary General D K Nair.India has only one major manufacturer of spinning machines in Laxmi Machine Works which has over 80 per cent market share in the segment.
