India makes big cut in tariffs on Chinese moulding machines

India has cut its anti-dumping duty on Chinese-made injection moulding machines to 29%, down from 174%, a big change in a policy that has been controversial within Indian industry.

India’s Ministry of Finance announced the new tariff levels 4 December, without commenting on why they were reduced. Sources said it’s not clear if the lower tariffs will bring more Chinese machines into India’s large injection press market.

The tariffs were first put in place in 2009, and Indian machinery companies argued they were needed to protect them from unfairly priced Chinese competition. Local moulders, on the other hand, wanted the duties removed entirely to get better access to technology and make them more competitive globally.

In interviews at the Indplas 2015 trade show in Kolkata, Indian press makers downplayed the new low import tariff as a non-issue. They argued that the industry has moved away from low-end price-sensitive equipment.

“Indian injection moulding presses are good in quality and technology now and there is absolutely no threat from China press imports after scaling down the import duty,” said N.K. Balgi, director of Ferromatik Milacron India.

Balgi suggested the duties may have been reduced as part of the Indian government’s “Make in India” program.

“We now have best of technology available with number of global [joint ventures] operating here, moreover, government announced various import incentives as part of ‘Make in India’ initiative as per WTO norms to import best of the machinery or equipment on favorable import policies,” he said.

FMI is the Ahmedabad, India-based subsidiary of US firm Milacron Holdings Corp.

China’s plastics machinery trade association, on the other hand, said it was “totally dissatisfied” with the new 29 percent tariff and said it would result in higher costs for Indian injection molding companies.

“Their anti-dumping is only a kind of trade protection, which is also a breach of WTO,” said Borch Zhu, chairman of the China Plastics Machinery Industry Association. “What they are doing is only to protect the India injection press manufacturer.”

An executive with China’s largest press maker, Haitian International Holdings, said that while the company was still studying details, the duties are still too high.

“Nobody in this competitive environment will be able to afford an approximately 30% higher price for imported machines from China,” said Haitian Director Helmar Franz. “So, sorry, for me it looks more like cosmetics.”

He said Haitian would continue to develop its assembly capabilities in Ahmedabad.

“[Lowering the tariffs] is a step into the right direction,” he said. “However, in my opinion — any tariff is firstly hurting the production base of moulders in India.”

An executive at Hong Kong-based machine maker Cosmos Machinery Ltd. had guarded praise for the Indian decision.

“CML welcomes India lowering its tariff, though it's still high in our view,” said CEO Freeman Tang. “Lowering trade barriers will open up the market, as it increases market demand.”

Another Chinese machinery industry source said a second, ongoing, Indian government investigation against injection molding machines from Taiwan, Vietnam, Malaysia and the Philippines, casts doubt on India’s openness. That review is expected to be completed by January.

“I do not think they have any intention to open their market,” the Chinese executive said.

Some industry sources noted the underutilisation of capacity in India’s moulding industry, with up to 70% of installed capacity underused.

Sources also noted that India’s domestic press makers began hiking capacity about three years ago in anticipation of increased demand, but the market remained subdued.

The head of one Indian trade group that has in the past argued for removing the tariffs, the All India Plastics Manufacturers Association in Mumbai, repeated that the tariffs should be removed because Indian machinery makers have increased their technology levels.

Lower tariffs will help India’s plastics industry, AIPMA said.

“More machines, more consumption of plastics… [will] generate employment and growth for the industry,” said AIPMA Chairman Arvind Mehta.