Depreciating rupee hits Taiwanese equipment makers

By Satnam Singh
Correspondent

Published: October 10, 2012 6:00 am ET

Related to this story

Topics Machinery Molds/Tooling
Companies & Associations

KOLKATA, INDIA (Oct. 10, 11:15 a.m. ET) — Taiwan’s plastics machinery makers are worried about a 40 percent fall in their order books in India, one of their largest export markets, following this year’s sharp drop in the value of the Indian currency against the U.S. dollar.

Speaking at the Indplas 2012 show, held Oct. 5-8 in Kolkata, Taiwanese firms said the depreciation of the rupee has led to big drop in what had been full order books a year ago. But they are hopeful the currency will stabilize and Indian companies will resume capital investment that they have put on hold.

The Indian currency fell from 48.6 rupees to the dollar in early 2012 to 57.1 at the end of June, before recovering somewhat to its current level of almost 53 rupees to the American greenback.

‘‘We have exported a lot of machinery to the automotive industry in India, but due to the slowdown in the Indian automobile market from the beginning of 2012, orders have dropped by almost 40-50 percent from last year,’’ said Grace Lin, the Africa and India Manager for Tianan, Taiwan-based Huarong Plastic Machinery Co. Ltd.

Huarong exported 200 injection molding machines to India in the last three years, and has offices in Delhi, Pune, Ahmedabad and Bangalore. About 80 percent of its business is in the country’s automotive market. But the falling rupee has made its equipment more expensive for Indian firms, Lin said.

She said the company has also been hurt by the closing of Indian car maker Maruti-Suzuki’s plant in Manesar for almost three months, after violence broke out and workers burned down part of the factory.

“The vendors of Maruti-Suzuki have been forced to shut down their operations and stopped sourcing machinery from us,” Lin said.

The company is looking to new markets in India, including in-mold labeling and two-color injection machines, and also is supplying six machines to India’s Central Institute of Plastic Engineering & Technology (CIPET), the first by any Taiwanese company to an Indian government organization, she said.

As well, business slowed down in 2012 for AFTA Technology Co. Ltd., a subsidiary of large Taiwanese press maker Fu Chun Shin, which has been selling equipment to India’s automotive sector for 25 years, including 10 machines making components for automaker Tata’s Nano car, said Diana Sung, a manager for Pune-based AFTA.

‘‘We are waiting for the Indian currency to stabilize against the dollar,’’ she said.

Taiwanese equipment supplier Steady Stream Business Co. Ltd. estimates that business is down almost 60 percent this year as its customers in the automotive industry have put projects on hold, waiting for the rupee to rebound.

‘‘We are hoping the worst is over,’’ said Vice General Manager Kenny Chen.

The company, which supplies tooling, injection molding and equipment, is changing its strategy away from major cities like Mumbai, Delhi and Chennai to move deeper into the Indian hinterland.

‘‘We have now changed the strategy and shifted our focus to Tier 2 and Tier 3 cities,” Chen said.

That’s a switch mirrored by other Taiwanese companies, said May Chien, director of business development for Pilatus International Co. Ltd., the Taipei, Taiwan-based marketing agent for the Indplas show.

‘‘India is big market for us and it cannot be ignored,’’ she said. ‘‘Therefore, we are looking for newer markets in the country. Earlier, we used to be more focused on the plastics shows organized in the cities of Delhi and Mumbai. Now we are focusing on the other parts of India.’’

She said the eastern regions of India could be a big market for Taiwanese companies in the near future.

Taiwanese firms have also been helped by the Indian government decision to put anti-dumping duties of up to 174 percent on some types of injection molding machines imported from mainland China, Chien said.

‘‘We are working hard to maintain a good market for our machinery in India,” she said.

Reflecting growing business in eastern India, the Taiwan External Trade Development Council, a government backed non-profit trade promotion organization, plans to open an office in Kolkata next year, said Chie Yien Huang, India director for TAITRA.

Huang said trade between India and Taiwan had been on an upward trend for five years before it suffered in 2012 because of the rupee depreciation and the recession in the European Union.

India was Taiwan’s third-largest market for plastic and rubber machinery exports in 2011, with Indian companies importing $95 million worth of equipment, up seven percent from 2010, Huang said.

TAITRA brought 11 exhibitors to the Indplas show.


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Depreciating rupee hits Taiwanese equipment makers

By Satnam Singh
Correspondent

Published: October 10, 2012 6:00 am ET

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