Japan’s largest sewing machines maker Juki Corporation is planning to set up a manufacturing plant in India. With the domestic textiles industry operating on outdated machinery, it is estimated that fresh investments of $40 billion are required by 2020 for sewing machines industry. In the next three years alone, apparel manufacturers need at least one lakh sewing machines.
Though the country allows 100% foreign direct investments (FDIs) in the textiles sector through automatic route, less than 1% of the total FDIs goes to it. During April-December 2008, the textiles sector received FDIs of merely $90 million, or 0.43%, of the total foreign investment of $21.15 billion.
Last month, textiles minister Dayanidhi Maran had visited Japan to get a sense of what the Japanese companies feel about investing in India. During the visit he had discussions with textiles machines manufacturers including Juki Corporation.
“Juki Corporation has expressed its interest and now sent the letter of intent to us. At present, it is preparing a feasibility report for the project,” a senior official in the textiles ministry told FE. However, emails to the Japanese company did not elicit any response.
Juki Corporation already has a subsidiary in India to sell its products in the country. The manufacturing activities of the company are carried out mainly in Japan, but it also has plants in Vietnam and China.
The company has 12 sales subsidiaries in nine countries including India, the US, China and Germany. Besides industrial sewing machines, it manufactures household sewing machines, electronic equipment and computer peripherals. The dampened demand since September 2008 has led to a fall in exports of clothing and apparel for the seven consecutive months till June 2009. In April-June 2009, apparel exports dropped by 15.4% to $2.41 billion compared to $2.85 billion in the same period last year, Apparel Exports Promotion Council’s (AEPC) data shows. Textiles firms sacked 1.54 lakh people in the first quarter of the current financial year.
AEPC chairman Rakesh Vaid said, “There is a big opportunity for sewing machine makers in India as apparel manufacturers need upgradation of their machinery. There is a prospective purchase of sewing machines worth $40 billion by 2020. The government is encouraging FDI and will definitely prefer those companies which have set up their shops in the country.” Federation of Indian Export Organisations president A Sakthivel said the industry needs at least 1,00,000 machines in the next three years.
Juki Corporation had witnessed a 40% year-on-year drop in sales during 2007-08. It incurred a net loss of 9,347 million yen, or $98 million, during the year against a net profit of 4,126 million yen, or $43.30 million, in financial year 2006-07.
The government is working on a strategy to increase this proportion and infuse a fresh lease of life into the sector, which is plagued by financial losses and job cuts due to slowdown in the demand globally.