This, according to sources close to the industry, is due partly to slackness in the textile industry, but largely because of irrational policies pursued by the government.

When indigenous demand for textile machinery stood at Rs 2,049 crore in 1993-94, the domestic industry met 50 per cent of it. When, however, the demand rose to Rs 3,411 crore in 1995-96, the share of indigenous industry in meeting it fell to 38 per cent.

In 1998-99, the demand was calculated at Rs 2,372 crore, while the share of indigenous machinery industry in meeting it nose-dived further to 37 per cent. Currently the domestic machinery industry is estimated to be operating only around 35 per cent of its installed capacity, as thegovernment has been reluctant in providing it a level playing ground.

Domestic production of textile machinery is shrinking fast. It plummeted 24 per cent to Rs 1,135.91 crore in 1998-99 from Rs 1,500 crore in the preceding year.The situation has been further aggravated this year as can be seen from the fact that the output has dropped 31 per cent to Rs 199 crore in the first quarter of 1999-2000, from Rs 291 crore in the same period of the earlier year.

The industry has been mortally hit not so much by slackness in textile industry as by the irrational policies pursued by the government of encouraging imports at the cost of domestic industry. Not only second-hand machinery discarded continuous to be at a serious disadvantage of the indigenous machinery industry.

According to industry sources, textile machinery manufacturers are facing uneven playing field due to continuing irrational structure of imported components. It has, moreover, to pay sales-tax and other local levies on their finished goods,bought-out components and raw materials.

Ideally the customs duty on imports of inputs should be at least 10 per cent lower than that on complete textile machinery imported from abroad but this is not being done. That has placed the domestic industry at a serious disadvantage.

When the government mooted the Technological Upgradation Fund Scheme (TUFS) the industry had high hopes that it would be able to step up its production and sales. Unfortunately disbursement of funds under the scheme has been tardy. Though funds to the tune of Rs 915.46 crore had been sanctioned by the end of August 1999, actual disbursements had been of the order of paltry Rs 54.67 crore.

It might be interesting to note that Small Industries Development Bank of India (SIDBI) which handles the proposals from small textile units for their modernisation, had sanctioned by the end of August last Rs 20.32 crore, but had disbursed a meagre amount of Rs 2.35 crore by that time. In the past, the industry was able to effect substantialexports of equipment produced by it. However in view of the prevailing problems in South East Asian countries and elsewhere, even exports are shrinking.

In 1997-98 exports of textile machinery and accessories amounted to Rs 325 crore, but they amounted to just Rs 200 crore in the first 11 months of 1998-99, compared with Rs 263 crore in the same period of the preceding year.India's exports of textile machinery have been hit also by severe competition from countries like China, Taiwan etc and availability of machines from developed countries and above all the Indian industry's inability to offer matching credits as provided by its overseas competitors.The industry does not see any ray of light at the end of the tunnel, as the government remains indifferent to its woes.