Imports hurt local plastics machinery makers

New machinery worth Rs 1,500-2,000 cr is imported every year primarily from the Southeastern countries. Used machinery is also imported

Ahmedabad has developed as a major hub for plastics machinery manufacturers, but import of machines from Southeast Asian countries has begun to hurt the local industry. And on the export front, payments are delayed, leading to the locking up of working capital for small and medium enterprises (SMEs).

About 100-odd units in and around Ahmedabad make machines for injection molding, extrusions, as well as blow molding, and have a combined turnover of around Rs 1,200 crore.

"While the overall market is down by around 20 per cent owing to the general slowdown, payments for consignments on both the export and local markets are delayed. While big players like Ferromatic are not affected, for small and medium enterprises, precious working capital is stuck," said N K Balgi, director of Ferromatic Milacron India Ltd, a leading manufacturer of injection molding and blow molding machines.

He added that industry bodies are in talks with the Centre to obtain a subsidy like the Textile Upgradation Fund Scheme (TUFS) for plastics processors, which would, in turn, boost demand for machinery. In addition, in order to make indigenous machine manufacturers competitive, government assistance in the form of cluster development is also necessary, he said.

Atul Kanuga, vice president of the Indian Plastics Institute, alleged that a great deal of machinery is being imported from overseas, especially from Taiwan and Malaysia. "Primarily, injection molding machines are getting imported from Southeast Asian countries, which is hurting the local manufacturers," he said.

The overall turnover of the Indian plastics machinery industry is around Rs 5,000-6,000 crore per year. New machines worth Rs 1,500-2,000 crore are imported every year, while used machines worth around Rs 800-900 crore are also imported. Industry insiders claim that the used machines are basically those that are discarded by processors in the European Union on account of lower energy efficiency.

"Machines from China too are imported through the Malaysia route, to avoid duties," said an industry insider on condition of anonymity.

"My business has been hit significantly in the last two years, after some of my clients opted for used machinery from the EU. Sales have dropped by 40 per cent for me. Also, as lifting of consignments is delayed, not only working capital, but also space is blocked at my premises," said a local small-scale machinery maker who runs a unit in an industrial cluster near Ahmedabad.

Some 60 per cent of the overall machinery industry comprises injection molding machines, while extrusion machinery comprises 28-30 per cent and the remainder is blow molding and other types of machines. It is mainly injection molding machines that are imported, thus hurting a major segment.

On the export front, Africa (especially Nigeria) is a major market for local machine makers. However, the downturn as well as political instability in some African countries has affected orders from these nations. Also, lifting of consignments is delayed, leading to delayed payments, and, in turn, blocking working capital.

The machine manufacturing industry was growing at 18-22 per cent about two years back. "In 2012-13, growth was stagnant, and this fiscal, we are expecting growth to be negative," Balgi said.