Technology Investments in Apparel industry Getting Back On Track after lots of ups & down

The major manufacturers of textile machinery are Germany, Italy, Japan, Switzerland, France and China. One of the major trends in the global textile machinery market is the growing number of technological innovations. India is one of the major importers of textiles machinery of these countries today. Besides, the size of domestic textile machinery industry is poised to hit Rs. 32,000- 35,000 cr in the next five years from the present Rs. 22,000 cr on the back of government initiatives like ‘Make in India’, according to a recent report.

Indian textile machinery industry has tremendous growth potential in coming future buoyed by growing domestic and global demand; the only need is to identify the untapped opportunities. The industry witnessed lots of ups and downs in last one year due to demonetization and GST implementation decisions taken by the govt.

Though demonetisation was a bold decision taken by the Government last year, it left a sudden jerk in the entire textile chain. Textile machinery suppliers faced the immediate impact as the orders were badly affected for a month a so. The bigger companies had less impact on the topline as they were already under organised sector and payments are effected through banks. The most-affected were the unorganised sector as they took some time to change to digital cash/online transactions. As the demand reverted back to normal within next few months with improvement in liquidity.

Just after the seven months of demonitisation, Govt. took another major decision by implementing the new GST system. According to the new system Goods and Services Tax (GST) rate for textile machinery were been decided at 18 per cent by the GST Council. The Council broadly approved the GST rates for goods at nil rate and 5, 12, 18 and 28 per cent to be levied on certain goods.

As per the information uploaded after the GST Council’s decision on the website of Central Board of Excise and Customs (CBEC), the rate of 18 per cent has been decided for the following textile machinery mentioned along with their 4-digit HS code:

• 8444 – Machines for extruding, drawing, texturing or cutting man-made textile materials
• 8445 – Machines for preparing textile fibres; spinning, doubling or twisting machines and other machinery for producing textile yarns; textile reeling or winding (including weft-winding) machines and machines for preparing textile yarns for use on the machines of heading 8446 or 8447
• 8446 – Weaving machines (looms)
• 8447 – Knitting machines, stitch bonding machines and machines for making gimped yarn, tulle, lace, embroidery, trimmings, braid or net and machines for tufting
• 8448 – Auxiliary machinery for use with machines of heading 84.44, 84.45, 84.46 or 84.47 (for example, dobbies, Jacquards, automatic stop motions, shuttle changing APPAREL VIEWS / AUGUST 2017 43 mechanisms); parts and accessories suitable for use solely or principally with the machines of this heading or of heading 8444, 8445,8446 or 8447 (for example, spindles and spindles flyers, card clothing, combs, extruding nipples, shuttles, healds and heald frames, hosiery needles)
• 8449 – Machinery for the manufacture or finishing of felt or nonwovens in the piece or in shapes, including machinery for making felt hats; blocks for making hats
• 8451 – Machinery (other than machines of heading 8450) for washing, cleaning, wringing, drying, ironing, pressing (including fusing presses), bleaching, dyeing, dressing, finishing, coating or impregnating textile yarns, fabrics or made up textile articles and machines for applying the paste to the base fabric or other support used in the manufacture of floor covering such as linoleum; machines for reeling, unreeling, folding, cutting or pinking textile fabrics
• 9024 – Machines and appliances for testing the hardness, strength, compressibility, elasticity or other mechanical properties of textiles.

Of course because of GST there was a stoppage in textile trade particularly in Surat and few other markets. But it’s a temporary blip as people will have to adjust to a new system. For companies which do everything on books are most happy and this will help companies that want to do legitimate business and those who are not doing they will be forced to come to do that. Though there was confusion among customers, in fact a few went on strike also which is now dissolved but they are realizing that there’s no back door. So, now it’s clear that this is the new system and they have to cope with it. Besides, many people are still learning the new system and how to do the costing.

It is to be noted that post GST implementation, the net price of imported machineries to customer will reduce. The distributor or importer will be able to pass on duties to end customer who can further claim it back. This will help to reduce gap between manufactured equipment in India and imports. This in fact is expected to boost the sales of imported textile machinery in India.

Irrespective of the present hardships and uncertainties, the industry is highly hoping that things will turn tables in the long run. This positive sentiment will certainly smoothen the path ahead and at the same time strengthen the industry internally.

To know more about the textile machinery suppliers’ perspective on these developments in last one year and their further plans, we spoke to some of the leading players from the fraternity whose views are covered in next few pages.

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For us India is very important and potential market for future. The country has a very long history in textiles, and also is one of the largest producers of cotton and is competitive enough in yarn, fabric and garment segments. For textiles, it definitely has a better future than any other ASEAN country. So, as an embroidery machine manufacturer we see huge scope in this market. Talking about the global market, earlier China was our biggest market but now it’s Turkey, USA and India. Though in last one year the Indian market witnessed few ups and downs due to change in govt. norms but we were not affected by the same. For us our machines sales in India are increasing especially because big factories prefer high quality machines so they go for Tajima, a Japanese brand. These factories usually cater to leading apparel brands from Europe and the US, whose representatives when visit garment exporters plants in India and see our machines, they get assured of their garments quality. In fact leading brands themselves recommend our technology to the exporters.

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It is a welcome move that the tax rate is at 5 per cent. This will boost and motivate manufacturers towards exports as the current system of duty drawback & the delays in its processing will lose its importance and the input tax credit will be given as refund under GST. This could potentially provide a good thrust for export of textile products.

As it replaces other prevalent taxes viz., VAT, CST, ST, SAD, Purchase, etc., it would also reduce manufacturing cost. It will enable and help the industry to become competitive in markets both domestic & global. Textile and garment industries to better their position globally, will be more open to investing in technologies that provide value to their businesses. We see this as a positive move that will also provide opportunities to technology companies, likes ours, to support these investments and bring world class best practices to the Indian textile & garment industry.

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GST is a game changer which is well accepted by all experts. The 12 per cent GST on sewing machines will definitely give a fillip to apparel manufacturing and should bring down the capital costs quite substantially.

The added advantage of a GST regime is to bring in more transparency and digitization to the entire supply chain process. This in itself is a game changer and will force the unorganised sector to come on board, if they want to avail the benefits of the GST process. We however see that implementation of GST can be a significant challenge in this financial year and we need to brace ourselves for all kinds of administrative issues. We are hopeful things will settle down in the next 6 – 9 months.

 

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In our opinion GST will open the door for fair business practices. It will also help Indian businessman do business comfortable in every part of the country.

Time has come in India for every businessman to walk straight and the results will obviously be excellent. Foreign businessman and joint ventures in India will also see best business practices and par with other developed nations. We are grateful the Government of India for their excellent initiative.

 

 

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Business last year was not very good because of demonetization and GST launching but I wish this year will be better because of clean business everywhere. GST is one of the best systems because of unique taxation but all the way price coming down for sewing machines is really good for garment industry, which is going to get benefit out of this of almost 15 per cent in terms of price.

This system will make it compulsory for everyone to come under organised sector. Otherwise, the market scenario seems to be good because China having issues like increasing labour cost, so as per many exporters, the foreign buyers are now shifting their orders to India. Hence, exports along with domestic market will keep on improving this year too. Overall, the textile industry will have very bright future ahead.

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The digital textile printing market in India is doing very well. Of course because of GST there was a stoppage in textile trade particularly in Surat and few other markets. But we take that as a temporary blip because people have to adjust to a new system. We ourselves are particularly delighted that the Indian govt. has implemented GST. For companies like us which do everything on books are most happy and we are thinking that this will help companies that want to do legitimate business and those who are not doing they will be forced to come to do that. Though there was confusion among customers, in fact a few went on strike also which is now dissolved but they are realizing that there’s no back door. So, now it’s clear that this is the new system and they have to cope with it. Besides, many people are still earning the new system and how to do the costing. Otherwise digital printing continues to be a fast growing area with new high speed machines coming in it has a bright future ahead in India. We don’t expect it will take too long and everything will be normal within next three months.

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Since we were doing everything with govt. regulations, and all our machines were going with excise pass so for all our customers it would be really beneficial now. Earlier they were not able to claim those excise duties on our signage machines but on textile machines we were already selling with excise and taxes exempted, so now GST coming in it would be really beneficial for them.

Only the people not registered under GST will have issues. I think in short term it might give them few hiccups but in long term it would be very good for the industry. We are quite positive and expecting to double our business post GST because we are only manufacturer doing everything legally. As far as market is concerned, there was a slowdown in last quarter but in first quarter we sold good no. of machines so we hope for th best in remaining three quarters. Besides, we are planning to have some big launches in coming nine months.

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Market is growing now, if we say in Tirupur domestic market is coming up in comparison to exports. Now, Tirupur people are getting good volume business from local Indian markets also. So, that is somewhere better now. Besides, slowly Ludhiana and Delhi markets are also picking up. We are making digital printing and transfer printing machinery as people are interested in digitalization from screen print so that is a growing segment now. The recent demonetization and GST decision by the govt. has not impacted us but infact has supported us.

Because we wanted to go in a proper way and that is the best option to do so. Additionally we are benefitted with the transportation time and money since we are sitting in Coimbatore and shipping all over India. Now our goods will reach much faster and hassle free so that’s a good sign. Last year our company grew by 20 per cent and we expect to continue the same.

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After GST, past 15 days were OK but now we have started getting orders. Earlier demonetization, now GST so domestic market will take some time to get out of the same. However, our business was not affected much. Now, customers have also realized that there is no need to wait unnecessarily and have started buying the machines again. The apparel & textile industry is doing well so we are expecting to get good no. of orders this year. We always try and bring new machines for the customers to stay ahead in the market.

The future will definitely be good for our company as well as textile industry as a whole because post GST all those working illegally without following govt. norms in unorganised sector will definitely close, though not completely but at least 70-80 per cent. I think it will take at least one month for everything to be back on track.

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The embroidery market is doing well these days. In future also we see a very good trend for embroidery segment as orders from China are shifting to other countries, and India is the only country which can cater to such huge embroidery orders. As a technology supplier, demonetization didn’t affect us as we don’t do cash transactions. But after GST, the machines which were shipped from China to India, customers asked us to hold their shipments for few weeks.The reason being they didn’t understand GST, even the CAs and accountants didn’t know what is going to happen. Only after 4th July we came to know about everything, and then our machines got released. We told the customers that this is the new procedure and you have to pay this much money which will come back to them, so they understood the whole concept. We stalled the sales for 15 days, until we got the clear idea and after that no stoppage. I think because of GST the business will grow because ultimately as per market calculations, after GST the end consumer will be getting the final product on a cheaper cost. For my company I foresee to have 15 per cent growth this year.

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The exports market is very good, but domestic market has gone down after GST. New taxation system is very good for the customers because the duties have gone down. Earlier the duties were 23.4 per cent and now it’s only 5.4 per cent so 18 per cent is the tax benefit which the customer is getting so the machine will be a lot cheaper than before. Currently, unorganised sector is against GST, once they are organised they will also start liking this concept. Earlier the service tax, which we were not able to claim; now we can claim that so it is good for us. The govt. is doing well for us but the main thing is that few people are unable to understand the same. Besides, the demonetization didn’t affect us and only those working in unorganized sector got affected by the same. I think as a whole, both the decisions are good for everyone in the industry to make everything organised. Altogether it will take few months to stabilize everything.

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Our company was not affected by demonetization as everything was already done in professional manner but due to GST we are affected very badly. For last 3-4 months, we are having problems as customers want to place the orders and we have a very big level of order bookings with advances but they have stopped, because all of sudden cost has gone up by 25 per cent and banks are not supporting.

So, we are also affected by the same. Though bigger enterprises have again started placing orders but smaller companies are still not ready. Otherwise, the embroidery industry is doing really well, and our customers are appreciating our work and that’s why we keep on getting repeat orders.

 

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The recent govt. decisions of demonetization and GST has helped us in boosting our business. As all those working in illegal way have stopped now, and orders are shifting to organised companies following all rules and regulations set by the govt. The market is doing well and infact despite of GST implementation, we are getting the orders. Though market is Surat is still weak but as we are catering to exports sector also, which at present is doing really well, we are able to maintain our growth pattern.

The domestic market of embroidery machines is also doing well nowadays. In terms of business last year was very good for us, and we are targeting to break all our previous sales record this year. Those who are opposing GST are the ones who don’t want to pay the taxes. We spoke to so many manufacturers and everybody is happy that excise duty is completely vanished. ‘One Country, One Tax’, so complete clarity for everyone.

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Impact of GST on textile trade is just a temporary phase and in future it would be definitely better. Post GST implementation prices of textile machineries in various segments have gone down. Customers are waiting basically as they are not sure what GST they have to apply on their products. This will be the phase for one or two months and ultimately it will be beneficial for overall textile industry.

The market for digital textile printing is growing, and the new technology which is coming in is our pigment printers, which has everything on its own so there’s no discharge, no water usage, and gives ready to wear products after printing directly. So, that is the future for this industry.

 

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Due to GST the market is closed, and we are hearing that Surat textile industry is again going on strike in coming week. If you print fabric, GST for jobwork is 5 per cent but in case of T-shirt it is 18 per cent. Various segments of textile are having different GST, so people are confused and several companies all over India are opposing it. But I am sure this problem will be solved soon. If they keep on doing the strike they will have to bear huge losses due to delay in orders, and how they especially small companies will bear their day-to-day expenses. Exporters in Surat are having orders but no fabric is available as all the stocks are finished.

As far as my company is concerned, future is very bright with particularly the new technologies that we have introduced. We always keep on bringing something new for the industry so it’s going good for us. We are also going to start our own home furnishing brand by the end of this year.

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After demonetization and GST implementation, number of printer sale is less compared to last year. But now everything has settled down and all the printing units have started working again in Surat and other parts of India. So, things will be normal after next two-three months. Those who at present are feeling GST is not good for the industry, sooner or later they will also realize its benefits. Maybe either govt.

will reduce GST or give some concession. It’s a matter of time. Same thing happened when VAT was introduced in India, there was lots of hesitation and opposition but at last everybody accepted the same. The market for print is growing more and more people are willing to shift to digital. First of all they want to have the knowledge and expertise to introduce digital with good designers, operators so people are interested and slowly are moving towards digital.

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Our core business is textile machineries and in past two years we started selling textile printing machinery. Now we have very strong foothold in India market. Initially we started with sublimation printing but slowly entered direct to fabric printing. As far our business last year is concerned, due to demonetization we did not get many orders for a month but after that we got our business back. If we compare our business in last two years, we increased by almost 50 per cent. Talking about GST, I think this taxation system will further liberalize the textile industry, and we are hoping further increase of our business post GST. We have preponed our future launches after its implementation, as we see more exposure in this line. More players are entering digital printing segment everyday so if we delay then there will be set-back for us. The printers which we were planning to launch next year, we are launching those this year. The duties on printers have been reduced by 18 per cent, so we will have more orders now.

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The market is growing nowadays. Though it was little bit affected by GST and demonetization, but that is for short term only. In long term both the steps will result in the betterment of this industry. Opposing the GST is useless as at the end everybody will have to accept the same and pay GST as there will be no option left for them. Our company was little bit affected by the same, but we still are able to maintain our average of selling 5 printers per month. In last one year we have installed more than 60 printers.

The market will pick up in another three-four months. The textile printing market is growing now, so in future we are planning to launch more new machines for the same.

 

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Though last month there was a slump due to GST, but again there are signs of market picking up. After GST implementation first 15 days were slow but now life is back to normal in the terms orders placement. Our business has been growing for almost 30-40 per cent every year so this year will also be the same as there will be no change for us.

Digital markets will take over the traditional market anytime now, as traditional is getting expensive and digital is becoming cheaper. Digital printing inks prices are getting down every year and buyers are also going for high speed technologies these days. So, overall future looks very bright for digital printing in apparel & textile industry of India.

 

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Last year has been very turbulent though we are looking forward to a better year. Last one year has not been very good. It’s because of the world market scenario, and demonetization only had lull affect and it’s more to do with the international market. I think GST will have a positive impact on our business; it a very temporary phase and people may take twothree months to understand the same but in long run its going to be beneficial for us. Right now market is not very good, though it’s giving some signals that it will improve soon.

In terms of products we don’t have anything new but will be planning to launch a new technology in the January 2018. I think 2017-18 is going to be very good for the Indian textile industry, though it has not started very well but I am sure when it is approaching the end this is going to be one of the best years for our company and this industry as a whole.

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GST has given us very nice impetus to growth because a job worker buying embroidery machine had to pay 24 per cent duty in the past but now 19.82 per cent is refunded back as an input cost to him. So, the actual cost of duty has come down to almost 7 per cent and he can benefit out of it. GST has helped us a lot so we see a very good growth.

In last three months we have done fantastic because of new technologies, we have introduced. The production which two Chinese machines can do is equal to our one machine. The Modi Govt.’s policies, norms and skill development initiatives are very favouable for the growth of Indian textile industry. For me vibes are positive and we see everything on the brighter side in future.

 

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Today, half of the people don’t know about the impact of GST on their businesses. For a domestic manufacturer who earlier was paying around 23 per cent duty is paying the same amount after GST also. But earlier they were not getting any benefit but now they get 18 per cent back via ITC. Infact exporters will also get same kind of benefit under IGST. Yes, there is lots of hue and cry in some parts of the country like Surat, where a major portion of this sector is still unorganised, and now they will be forced to do everything on paper following the govt.’s new GST regime. Implementation of GST will help everyone in long run by making this whole chain organized. As far as our company is concerned, though during GST implementation phase our business got affected but despite of that we sold maximum no. of machines in last six months only. It will take atleast few more months to stabilise everything in this industry, but we expect the market to boom after Diwali, making 2017-18 to be a better year than 2016-17.

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After GST there has been little turbulence in the domestic sector but it’s going to pick up. Basically it’s like taking two steps back to take a longer leap. We always have a parallel economy running in India so with GST coming up it has taken a hit. Especially if we talk about Delhi, which is an export oriented market, there is hardly any difference. When we travel down to Ludhiana, Kolkata, Surat there are more of domestic sectors so obviously because of parallel economy getting hit there’s major turbulence in the market. But surely it’s just a transition time, which is going to settle down as things will eventually turn out to be good. It will take next two-three months to stabilize as on the govt. part things are not very clear and there’s lots of confusion. As far as our machines are concerned, custom duties post GST have come down. There is GST of 18 per cent on machinery, but few customers don’t think it as an input credit but as an additional price for the machinery. The textile industry of India is growing, though lately it was on a roller coaster ride but now it’s growing. For DCC last year was very good in terms of business, and we expect this year to be even better. We are into expansion mode and very soon will be opening up a new office in Delhi. We are expanding our territories, and going to the untouched sectors also.

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Impact of GST can by analysed in two ways one from sellers’ perspective and other from buyers’. As a technology provider, our machinery prices are not affected much as earlier we were claiming under MOD VAT when paying the excise duty, and now under GST. So, our input cost has not changed much. But when it comes to buyers, our machine is sold to both domestic and export segments. The exporters today are claiming the GST in lieu of the drawback, which they were claiming earlier, so overall they had very little impact. But the costing for the end consumers whether they are from any industry has gone up. For my company business has been growing multi-folds for last one year. Though due to GST our business was a little hit but overall it was good for us. We had pre-bookings in April which were delivered in July. Of course for one month in June our sales were stagnant because buyers were confused about GST implementation but in July we sold twice the no. of machines. Overall, we are very happy with the decision, which is a welcome move by the govt.

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During the last one year this market has grown exponentially because lots of people going for the online selling of T-shirts. They print customized T-shirts and sell online. The market for DTG is emerging like anything. Earlier it was like 10 machines in a year now the time has come to talk about 10 machines per month. It will be too early to make any comment on GST as people are not geared up with the GST systems.

But according to me it will take couple of months to get the things streamline as far as GST’s proper implementation is concerned. Demonitisation of course had an impact as in India many people do transactions in cash. GST is a positive step for country ’s wellbeing but all will depend on how it’s implemented.

 

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There had been definitely slow down due to demonetisation and GST implementation. It has acted only as a speed breaker to introspect the business and fall in line with the new systems. GST was awaited with bated breath and trepidation by the garment sector as the administrative costs were going to spiral upwards since most of the activities were earlier out of the tax net.

With GST in the picture, the improvement in compliances will lead to transparency, ease of compliance and time optimization, gaining productivity and growth. Now since GST is live, things are getting streamlined and I am very positive that this has long fruitful results. In short the serious business persons are back on track which is very evident with our company’s over achievement of Q1 targets for this fiscal.

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