Financial Daily from THE HINDU group of publications
Friday, Aug 01, 2003
Industry & Economy
Second-hand loom owners seek MEE quotas
Coimbatore , July 31
MANUFACTURER-exporters of powerloom fabric who have made investment in used shuttle-less looms feel let down in the matter of allotment of manufacturers exporters entitlement (MEE) quotas, meant for new investments in technology.
The Textile Ministry, which allots the quotas, regards second-hand looms incompatible to the technology norms prescribed as per the technology upgradation fund scheme (TUFS) and hence ineligible for MEE quotas.
Over 90 per cent of these used imported looms installed in recent times fall outside the purview of the TUFS. Thus, these loom investments do not get any quota benefit which is extended to the MEE allottees in the form of new investment quota (NIQ) route operating within the overall MEE quota scheme, Powerloom industry sources told Business Line.
At present exporters stand to get 15 per cent MEE quota in the overall export entitlements and within the MEE, specified quantities of quotas are allotted to those exporters who have invested in the new plant and machinery that conform to the TUFS technology.
The predicament for the powerloom owners, who invested in the used shuttle-less looms, is that on one hand their investments would exceed the Rs 1-crore ceiling kept for the SSI investment, thereby depriving them of export quotas under the normal powerloom exporters entitlements (PEE) route.
On the other hand, they would not be considered for the MEE quota because investment on second-hand looms do not come under the TUFS investment purview.
The powerloom owners, who have opted for imported second-hand looms feel that they chose to invest in the used shuttle-less looms of more than 10 years old, on the factors of return on investment and the relative higher technology levels they offered to the user industry in meeting the market requirements.
These looms were all improved under valid import licences in support of the Central Government. This way, their investment in this regard too has achieved the broad objective of the Government in encouraging more investments into weaving sector.
Therefore, the loom owners want the Government to weigh this factor and accordingly permit the investors in second-hand looms to access the MEE quota allotment given for new investments. The powerloom development and export promotion council (PDEXCIL) has taken up the issue with the Government.
The powerloom units in Tamil Nadu which went in for massive investment in the past two years in the used shuttleless looms are keen the Ministry of Textiles should intervene in this matter.
It is estimated that over 15,000 used second-hand looms were allowed to be imported through special import licence in the last two years. Of this, the industry sources say that the import of the TW-11 model shuttleless looms alone would have touched the 10,000 levels.
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