INDIAN textile firms, which are in an expansion mode following the quota phase-out, are aggressively looking at buying out textile manufacturing units in the EU and the US with the aim of relocating machinery to India.

While a major shortage of domestic textile machinery has prompted firms to look at this option, the fact that a number of defunct textile mills with usable machinery are up for sale at throwaway prices in the EU and the US makes the option viable for domestic firms.

For instance, Gujarat Heavy Chemicals Ltd, a Dalmia Group company, is in talks to buy out four large home textile units in the US and Europe, with plans to relocate the machinery to India.

Mr Shishir Jaipuria, Managing Director of the Delhi-based Ginni Filaments, admitted to the shortage of textile machinery in the country. "There is a 18-24 month waiting period for most types of textile machinery in the country at present. The industry has to look at other options if it has to undertake a capacity expansion programme," Mr Jaipuria said.

In the wake of increasing number of enquiries from Indian firms, European textile players, including firms from Italy and Germany, had a sizable presence in the recently concluded Asian textile conference here to scout for buyers for their plants. Players such as German Machine Tools Corporation, a leading supplier of second-hand machinery, have started undertaking project appraisals and consulting assignments abroad from Indian textile mills.

The firm specialises in sourcing machinery from the West and reconditioning it before supplying it to customers here. The company has also started carrying out the complete setting up and commissioning of the imported plant so that the customer gets the plant in full working condition.

Italian machinery manufacturers including Promatech-Savio, Essico Srl, Marzoli Spa, Mario Crosta Srl and Panter Srl are among those gearing up to enter the Indian market.

"Most of these European and American players, who have been rendered uncompetitive following the phasing out of textile quotas, have usable, hi-tech machinery which can be shipped in at a fraction of the cost of new machinery. Also, most second-hand machines are imported at very low prices and a number of specified machines are subject to concessional import duty rate of 5 per cent," a Confederation of Indian Textile Industry official said.

Following the increasing trend among industry players to import second-hand machines, the Government's Inter-Ministerial Steering Committee is also considering a relaxation of the stringent residual life norms for imported machines such as second-hand spindles to make the process of imports viable, Government officials said.

Thehindubusinessline.com