Taiwan eyes bigger share of Indian machine tools imports

Seeks to take on cheap imports from China currently dominating market

Taiwan, a global hub for precision tools manufacturing, is gearing for a larger share of the Indian market, which is dominated by cheaper, low precision imports from China.

The Taiwanese government has asked manufacturers and traders to focus on the industry as part of bilateral trade with India.  It had also discussed the issue with the Indian government, a Taiwanese diplomat said.

More Taiwanese companies were partnering Indian ones and talks were advancing regarding investments in manufacturing plants in and around Bengaluru and Hyderabad, Hung Yang, executive director of economic relations at the Taiwanese embassy, told Business Standard.

Source: Ministry of Commerce and Industry

While companies manufacturing parts for heavy machinery and engineering tools figure primarily on the list, original equipment manufacturers for electronic devices are also moving in.

These include Taiwan-based Foxconn, which assembles electronic parts for Apple smartphones and has plans to increase the number of facilities it operates in India and shore up production.

Heavy imports in the crucial sector underline serious gaps in India’s manufacturing capabilities with domestic manufacturers way behind the burgeoning demand.

Precision machine tools, part of the larger group of electrical machinery imported from Taiwan, constitute the largest chunk of inbound trade from the island nation. India imported $626 million worth of such goods from the country as part of its $3.14 billion import list.

Similar imports from China were significantly larger at $21 billion in 2016-17. “While it may sound ambitious for Taiwan to take on such figures, we have encouraged traders to diversify import orders from various nations,” a commerce ministry official said.

India’s trade deficit with China ballooned to over $51.09 billion in the last financial year. Indian and Chinese soldiers are in a stand-off in the Doklam plateau of Bhutan and officials said chances of conclusive bilateral talks on trade were slim in the near future.

Taiwan’s Golden Valley region, home to 1,000 precision machinery manufacturers and 10,000 suppliers, has the highest density of any machine tool industry cluster in the world. The industry is varied across 72 categories with cutting and grinding tools along with those used for planning, shaping and boring having the majority share of the market.

Taiwan remains the fifth-largest exporter in the category globally but has been gaining rapidly in markets such as the US and India.

“Earlier, most of the tools were being imported, now more companies are jointly manufacturing in India,” said Rohit Roy, representing Tongtai Machine Tools.

A machine tools expo was supported by the Taiwanese government in New Delhi last week. Germany remained the largest producer of such products but prices offered by Taiwanese companies were competitive, a Delhi-based importer said.

Bilateral trade with Taiwan had slumped in recent years as part of a larger global slowdown but rose 11 per cent in 2016-17.