Faced with a slower economy, India's plastics sector seeks more tariffs

By Steve Toloken
Staff Reporter / Asia Bureau Chief

Published: January 23, 2014 1:27 pm ET
Updated: January 23, 2014 1:37 pm ET

Avinash Joshi, joint secretary of India Ministry's Department of Chemicals and Petrochemicals

Related to this story

Topics Public Policy, Machinery, Materials Suppliers, Asia

India's plastics sector is increasingly asking for higher tariffs and more government support against imports, particularly from competitors in Southeast Asia and China, as it copes with the country's slowest economic growth rates in a decade.

One of the country's largest polymer trade associations, the All India Plastics Manufacturers' Association, for example, used public forums at the recent Plastivision 2013 show to repeatedly urge the government to impose 20 percent tariffs on imported plastics products from the ASEAN countries and China.

The trade show, held in mid-December in Mumbai, was full of executives talking about the long-term potential of India, which projects to double its polymer consumption to 20 million metric tons by 2020.

But alongside that optimism, executives from all segments of the industry, including materials, machinery and processors, stepped up their calls for higher tariffs to, in their words, level the playing field against unfairly priced imports.

The head of India's plastic machinery trade group, for example, said he expected the government to renew the steep antidumping duties on Chinese-made injection machines when they expire later this year.

As well, India's resin manufacturing industry recently secured an increase in tariffs on imported materials, from five percent to 7.5 percent, although other local groups, like Mumbai-based AIPMA, strongly opposed it saying it raised costs for the country's injection molders and other processors.

Smaller industry segments were also raising the call. Indian recycling equipment maker Vipul Plastic Machinery Pvt. Ltd., in an interview in the Plastivision show newspaper, said the government should put higher tariffs on Chinese-made recycling machinery.

Arvind Mehta, chairman of AIPMA's governing council, said that 90 percent of the Indian processing companies are small and medium-sized firms. In several speeches at Plastivision, he argued that free trade agreements with the Association of Southeast Asian Nations disadvantaged Indian firms with duty-free imports.

"Now, with the signing of the FTAs with ASEAN and like that, a lot of plastic goods are coming in and that is hurting our business," he told Plastics News. "We are paying the taxes to the government at the rate of 7.5 percent or 8 percent. That is the difference."

"We are not against imports," he said. "We are demanding a level playing field by which our industry can survive."

AIPMA first issued its call for tariffs on finished plastic products in September as part of a broad call for more government help, including rolling back tariffs on imported plastic resin. At the time, they said the weakening rupee had made imported materials much more expensive.

It's not clear how the Indian government would respond, but one minister speaking at Plastivision defended the free-trade deals.

Avinash Joshi, the joint secretary of the government's Department of Chemicals and Petrochemicals, said the ASEAN trade pacts have been very balanced in imports and exports for the country. That echoed recent interviews from more senior officials in Indian media that said the deals have boosted trade volumes.

He did not directly address the call to raise tariffs but said the Indian industry has problems like the small size of its companies and should to take action to improve itself: "R&D is one. We are hardly spending anything."

"At times we see from a very myopic view what is happening in our sectors," he told more than 100 association leaders at a conclave on the sidelines of Plastivision.

Other speakers at the meeting similarly urged Indian companies to improve the capital management or adopt a code of conduct similar to that of Germany's VDMA machinery industry trade association.

Joshi said the government, too, needed to do more to improve infrastructure, specifically noting complaints from the plastics sector about India's ports.

In spite of those government comments defending the trade deals, the head of the Plastics Machinery Manufacturers Association of India said he expected the government to renew the tariffs on Chinese-made injection molding machines first imposed in 2009.

"Absolutely," said Mahendra Patel, chairman of the New Delhi-based association and chairman of Mamata Machinery Pvt. Ltd., when asked if he expected renewal. "We know because we have reported very strongly and we have all positive signals."

Those tariffs, which for some companies are as high as 223 percent, had a significant impact on some Chinese producers.

Ningbo Haitai Machinery Manufacture Co. Ltd. sold several hundred machines a year in India before the tariffs but only about 15 a year now, said Kevin Shen, in an interview at the company's Plastivision booth. Still, it came to the show because it saw long-term potential, he said.

Some Indian materials companies were hailing the benefits of higher tariffs. Indian Oil Corp., for example, specifically noted in its annual report that the increase in raw material tariffs to 7.5 percent would increase its profitability.


Comments

Faced with a slower economy, India's plastics sector seeks more tariffs

By Steve Toloken
Staff Reporter / Asia Bureau Chief

Published: January 23, 2014 1:27 pm ET
Updated: January 23, 2014 1:37 pm ET

Post Your Comments


Back to story


More stories

Image

Brown signs California's plastic bag ban into law

September 30, 2014 1:38 pm ET

Gov. Jerry Brown (D) made it official today: plastic bags are banned across the entire state of California.    More

Image

New Hexcel plant will supply carbon fiber for Airbus A350 XWB

September 30, 2014 2:43 pm ET

Hexcel Corp. is investing $250 million on a new carbon fiber plant in France, with part of the production going into the future Airbus SAS A350 XWB.    More

Image

LyondellBasell CEO Gallogly to retire

September 30, 2014 3:00 pm ET

James Gallogly, CEO of Houston-based polyolefins producer LyondellBasell Industries NV, on Sept. 29 announced plans to retire in 2015.    More

Image

Toyoda Gosei pleads guilty, agrees to $26 million fine for price fixing

September 30, 2014 11:27 am ET

Toyoda Gosei Co. Ltd. has pleaded guilty and agreed to pay a $26 million fine for its alleged role in an international conspiracy to rig bids and fix ...    More

Image

Amcor planning more growth in Asia

September 30, 2014 10:24 am ET

Flexible packaging firm Amcor Ltd. is rapidly expanding its presence in the Asian market. The company's top official in the region said it will soon a...    More

Market Reports

Plastics in Mexico - State of the Industry Report

This report analyzes the $20 million dollar plastics industry in Mexico including sales of machinery & equipment, resins and finished products.

Our industry analysis highlights macro industry trends and micro trends faced by companies that do business in Mexico. The report also provides key industry statistics and forecasts to anticipate future industry expansion.

Learn more

Plastics Caps & Closures Market Report

The annual recap of top trends and future outlook for the plastics caps & closures market features interviews with industry thought leaders and Bill Wood’s economic forecast of trends in growing end markets. You will also gain insight on trends in caps design, materials, machinery, molds & tooling and reviews of mergers & acquisitions.

Learn more

Injection Molders Market Report & Ranking 2014

This special package contains our 132-page 2014 Market Report on the Injection Molding segment and our exclusive 2014 RANKINGS database of 500+ Injection Molders for a discounted package price.

Learn more

Upcoming Plastics News Events

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 16, 2015 - September 18, 2015Plastics Caps & Closures - September 2015

More Events