India’s textile sector is not only among the oldest industries in the country but also the third-largest manufacturing industry in the world. While it’s responsible for more than 6% of textile production globally, the sector contributes about 2.3% to the country’s GDP and employs over 45 million people directly, making it the second-largest employer after agriculture.  

The role of MSMEs in this sector cannot be overstated, as they account for nearly 80% of the total textile industry. This industry is also heavily dependent on machinery required for sewing, weaving, dyeing, and more. Therefore, upgrading and maintaining machinery is imperative as it would help MSMEs avoid lagging amongst their competitors in the following manner: 

• Decreased productivity: Delivery schedules and profitability are impacted by slow production rates. 

• Low-quality goods: Faulty goods undermine consumer confidence and a brand’s reputation. 

• Increased energy consumption: The cost of operating inefficient machinery rises. 

• Limited competitiveness: Textile MSMEs find it difficult to compete with bigger firms and foreign rivals who use cutting-edge technologies. 

• Frequent breakdowns and maintenance: These result in high downtime and low output.  

As MSMEs work hard to stay competitive and meet growing demands, opting for loan options specific to machinery and ancillary equipment is one way to do so.  

How Loans for Machinery Can Be Beneficial

MSMEs often struggle to upgrade their machines due to the high cost of new equipment. Machinery loans are loans that address this particular need by offering much-needed support,  thereby enabling MSMEs to improve profitability, quality, and productivity without facing immediate financial hardship. 

Machinery loans have several benefits, such as: 

1. Obtaining Advanced Technology 

Machinery loans allow businesses to invest in state-of-the-art technology that has the potential to transform their production processes completely. They provide financing choices that let MSMEs stretch the cost of new machinery over time. For instance, the precision, speed, and efficiency of textile manufacturing can be greatly increased by using automated cutting tools, digital printing equipment, and sophisticated weaving machines. 

2. Improved Efficiency and Productivity   

Modern machines’ automation features minimize manual work, reduce errors, and increase production speed. This further enables better use of human resources and quicker turnaround times. An MSME that formerly needed a week to complete a big order may now do it in half, enabling them to take on more work and cater to the growing demand. 

3. Better Product Quality   

Modern machinery increases productivity and improves the quality of the goods produced. It also helps organizations maintain higher standards consistently. This is especially crucial for MSMEs trying to maintain high-quality standards in a bid to cater to foreign clients, and win landing long-term contracts. 

4. Increased Production Capacity  

MSMEs can expand their operations to meet increased demand with access to modern machinery. Businesses with updated machinery would increase output during peak seasons to take advantage of the spike in orders. Additionally, by investing in technology that enables quicker production cycles, these businesses may stay ahead of the competition and complete orders faster than their rivals. 

5. Savings on Costs 

Modernizing machines may seem like a big upfront expense, but their energy-efficient design lowers operating costs. New equipment also needs less maintenance. 

India’s textile industry is poised for unprecedented growth, with a projection of a $350 billion market by 2030. MSMEs can capitalize on this opportunity by investing in modernizing their infrastructure and processes. A promising way to achieve this is by adopting machinery and equipment loans from regulated NBFCs such as Protium Finance Ltd.