Page 1 Working group TEI Vision for the sustained growth of Indian Textile Engineering Industry under XIIth Five Year Plan Working Group on Capital Goods

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Page 1 Working group TEI Vision for the sustained growth of Indian Textile Engineering Industry under XIIth Five Year Plan Working Group on Capital Goods & Engineering Sector Sub Group for Textile Engineering Industry August 2011 Slide 2 Page 2 Working group TEI Contents of the document Introduction Results Vision for the sustained growth of Indian Textile Engineering Industry (TEI) under XIIth Plan Annexes 1 2 3 Slide 3 Page 3 Working group TEI This presentation takes into consideration the following aspects: Introduction 1.1 Base lining of sub- sector Size and growth rates Export & import levels Technology status Indias position inglobal value chain Other aspects Policy andincentives Sectoralconstraints 2.1 Benchmarking withChina and other majorcountries 1 Current status 5 Actions Budget & Policies 2 Goals 1 5.1 Action plan for12 th five year manufacturing planfor capital goods Key milestonesfor 12 th plan 5.2 Policies,projects andschemes required5.3 Budget requiredto support 12 th plan agenda 2.1 Priority segments and target positioning ofIndia in global supplychain2.2 Target parametres forsub-sector Target size & growth Target export levels Target employmentlevels Target technologies tobe developed Other aspects 3.1 Key success factors to be adopted 3.2 Constraining factorsto be addressed 4.1 Strategies to secure target size and growth 4.2 Strategies for importsubstitution, exportenhancement andincreasing value additionin India4.3 Strategies fortechnology enhancement4.4 Strategies for jobcreation and skilldevelopment4.5 Role of Private sector,Government and PSEs 3 Critical Factors 4 Strategy Slide 4 Page 4 Working group TEI TEI Vision is to grow an internationally competitive industry with technology upgradation, meeting 75% of local demand 1 A strong TEI with a potential to grow, compete, and export Provide strong support to the Indian textile industry to make it vibrant and competitive Acquire technological strength in all sectors, as it is in spinning machinery Increase market share from existing 50% to 75% to satisfy local demand for textile machinery Capacity scale-up commensurate with increased demand India to become a manufacturing hub for textile machinery, parts/components and accessories, contributing further to employment generation, skill development & GDP Aggressive pursuit of FDI to acquire key technologies and R&D Introduction Slide 5 Page 5 Working group TEI TEI An Overview 1 The Textile Engineering Industry (TEI) in India is one of the five key engineering sectors Consists of over 1400 units, with a total investment of Rs.6,900 crores* More than 80% of the units are SMEs* Installed production capacity - Rs. 8048 crores* and capacity utilization at 75% Provides direct/indirect employment to > 250,000 people* TEI contributes significantly to the competitiveness of the Indian Textile Industry (TI) Meets 50% demand of the Indian textile industry* Source : TMMA / Textiles Committee Introduction Slide 6 Page 6 Working group TEI Contents of the document Introduction Results Annexes 1 2 3 2.1Current status 2.2Goals 2.3Strategy 2.4Critical factors Vision for the sustained growth of Indian Textile Engineering Industry (TEI) under XIIth Plan Slide 7 Page 7 Working group TEI TEI production grew at a CAGR of 4.21% during XIth Plan due to global recession which adversely affected the textile industry Growth trends TEI (XIth Plan) 2 Projection Source : TMMA Current status Slide 8 Page 8 Working group TEI Current status 2.1 Total world wide demand for textile machinery 1 estimated at about 30 bn USD in 2010 2010 Total Textile Machinery demand [1$=1.28CHF, 1=1.4$] Source: Gherzi Ginning 250 mn $ =1% Short staple spinning5200 mn $ =17% Synthetic4000 mn $ =14% Jute 250 mn $ =1% Testing equipment 550 mn $ =2% Weaving3300 mn $ =11% Knitting3500 mn $ =12% Finishing3200 mn $ =11% Industrial stitching4000 mn $ =14% Msc 2 5000 mn $ =17% 1 not including spares, consumables and accessories as well as second hand machinery 2 including nonwoven, webforming, longstaple, embroidery, braiding, trimming and other garmenting equipment (cutting, engraving, fusing, quilting, ironing, folding), other synthetic machinery (other than extrusion & texturizing), etc ~ 30 bn $ Slide 9 Page 9 Working group TEI 2.1 Indian based production of textile machinery is still minor in most segments 2010 Repartition of major textile machinery producing regions [1$=1.28CHF, 1=1.4$] Current status Produced in ChinaProduced in IndiaProduced in EU & JapanNot specified (e.g. Brazil. Taiwan, S. Korea, Turkey) Ginning 250 mn $ Spinning 5.2 bn $ Synthetics 4 bn $ Jute 250 mn $ Testing 550 mn $ Weaving 3.3 bn $ Knitting 3.5 bn $ Processing 3.2 bn $ Industrial Stitching 4 bn $ 100 % 90 % 80 % 70 % 60 % 50 % 40 % 30 % 20 % 10 % Source: Gherzi Slide 10 Page 10 Working group TEI Contents of the document Introduction Results Annexes 1 2 3 2.1Current status 2.2Goals 2.3Strategy 2.4Critical factors Vision for the sustained growth of Indian Textile Engineering Industry (TEI) under XIIth Plan Slide 11 Page 11 Working group TEI 2.2 India has the potential to improve its position (reflecting on market shares) in all segments of TEI: Goals Source: Gherzi Report Criteria Size of sector (international) 2010 - bn $ Growth of sector (international) Presence of Indian textile industry Estimated India market share1 2010/11 [value] Growth of sector (India) Export Opportunities (machinery related) Ginning 0.25 Spinning 5.2 Synthetics 4 Jute 0.25 Weaving (incl. prep) 3.3 Knitting 3.5 Processing 3.5 Testing 0.55 Industrial stitching 4 =++-+++++ 25-30% + high 8-12%3-5%10-14%2-4%0-1%3-5%1-3%0-2% ++=+++++ highmedium high (but mainly powerlooms) medium highlow highmedium high medium 1 Market share of the textile machinery produced in India 2 Market share of the textile machinery produced in India Estimated China market share 2 2010 [value based] 25-30%35-45%20-30%40-50%30-35%20-30% 30-40% Market share Goal (until 2020) for TEI >40%> 20%>10%>20%>10%> 5%>10%> 5% Slide 12 Page 12 Working group TEI 2.2 TEI is projected to grow from Rs 8000 crores to Rs 14300 crores during XIIth Plan at CAGR of 15.1% based on commensurate growth of Indian textile industry and expected policy interventions: Goals Source: TMMA Projected Growth trends TEI (XIIth Plan) Slide 13 Page 13 Working group TEI 2.2 Existing employment (Direct & Indirect) in TEI is expected to grow from 2.85 lakhs to 4.27 lakhs during XIIth Plan however being a capital and technology intensive sector the principal gains will be in value addition & import substitution: Goals Source: Textile committee census & TMMA Projected employment growth TEI (XIIth Plan) Slide 14 Page 14 Working group TEI Contents of the document Introduction Results Annexes 1 2 3 2.1Current status 2.2Goals 2.3Strategy 2.4Critical factors Vision for the sustained growth of Indian Textile Engineering Industry (TEI) under XIIth Plan Slide 15 Page 15 Working group TEI Strategy 2.3 The Sub group suggests a strategy based on short & long term measures 2011/122012/132013/142014/15 Short term measures (responsibility: GOI / TEI) 1 Long term measures (responsibility: GOI / TEI) 2 Encourage FDI on top priority through joint ventures and 100% foreign ownership Establish Technology Upgradation Fund for TEI Discourage import of second hand textile machinery Address fiscal policy constraints and anomalies Sustain FDI in Hi-tech segments Strengthening TEI infrastructure through clusters development and SEZs R& D Institutional capacity building and private sector incentives HRD through vocational training institutes Export promotion Slide 16 Page 16 Working group TEI Strategy 2.3 Action 1: Encourage FDI for capacity expansion and technology upgradation (1 of 2) Ginning SectorRequired know how Indian OEMs are well positioned, since they have know how regarding all 3 ginning technologies Spinning Acquire know how related to: High end compact spinning High speed OE High speed winders High speed woolen / worsted frames Air Jet technology Synthetics Acquire know how related to: Extruders Spinning beams Godets Winders Testing Ways to acquire know how / brands Evaluate a take over of the Continental brand Explore opportunities with Lummus Invest in internal R&D Evaluate to work with western Universities (Aachen, Dresden, etc) Winders: Attract investments of Savio, Muratec and Schlafhorst into India as an alternative to China Attract major EU OEMs (Oerlikon (Barmag, Neumag) to produce / assemble in India (as alternative to China) Contact medium sized EU OEMs (Swisstex, SML, Sahm, Giudici) in order to explore J&Vs or attract them to assemble / produce in India Jute Acquire know how related to: Opening, Cleaning, Blending Spinning Indian OEMs should proactively contact the major EU OEMs (Schlumberger, Gaudino, Bonino, Finlane, etc) in order to explore JV / M&A opportunities Attract EU OEMs (Schlumberger, Trtzschler, Gaudino, Bonino, Finlane) to produce / assemble in India Acquire know how related to: Filament yarn testing (on / offline) Explore M&A or JV activities (e.g. with Sensoptics) on the filament sector Build up and / or strengthen dedicated R&D cells at universities Source: Gherzi Report Slide 17 Page 17 Working group TEI Strategy 2.3 Action 1: Encourage FDI for capacity expansion and technology upgradation (2 of 2) SectorArea of intervention Weaving Acquire know how related to: Shuttleless looms (rapier >400 rpm; air jet > 800 rpm; water jet > 800 rpm) Knitting Processing Acquire know how related to: Environmentally sustainable processing High speed wide width processing Special purpose processing and finishing machinery (e.g. plasma- finishing) Acquire know how related to: High speed circular knitting machinery (Microprocessors) Warp knitting Industrial Stitching Acquire know how related to: Hi-tech industrial stit