India's Ministry of Commerce and Industry is investigating whether Chinese companies are dumping injection molding machines into India in a sign of friction between two of the world's fastest-growing countries for plastics.
A complaint by L&T Demag Plastics Machinery Ltd. prompted the anti-dumping probe, announced by the Indian government July 8. L&T Demag is a major injection press builder in India, running two plants in Chennai.
L&T Demag is a joint venture between Germany-based Demag Plastics Group and Indian partner Larsen & Toubro Ltd., and it also runs a factory in Ningbo, China.
But even though L&T Demag kicked off the action, officials were keeping tight-lipped.
A spokesman in India for L&T Demag said company officials cannot comment. Officials at DPG headquarters in Schwaig, Germany, did not respond to requests to comment. Demag Plastics Group was purchased by Japanese press maker Sumitomo Heavy Industries Ltd. earlier this year.
According to the Indian government, L&T Demag is alleging that China is dumping plastics machines in India and requested the formal investigation, covering injection presses of 40 metric tons of clamping force and larger.
If the investigation finds dumping of Chinese machines, the Indian government could levy special anti-dumping duties, ``to remove the injury to the domestic industry,'' India's Ministry of Commerce and Industry said.
News of the dumping allegations drew a mixed reaction from machinery and plastics industry officials in India, China and the United States.
The Indian plastics industry is watching the situation closely. Chinese machinery imports are increasing every year, said Arvind Mehta, president of the PlastIndia Foundation in Mumbai, which operates the PlastIndia trade show.
The PlastIndia Foundation has not taken a position on the anti-dumping petition, but Mehta said they want to be supportive of local manufacturers.
``It is the price of the Chinese machines that makes the difference,'' he said. ``Definitely it is not a healthy sign for Indian manufacturers.''
But Mehta said rising costs in China could push up the sticker price of Chinese machines, giving an opportunity to Indian-made machines.
At the All India Plastics Manufacturers Association, President Raju Desai said demand is outstripping supply of injection presses in India. Instead of imposing anti-dumping duties, the government should work to reduce duties on machines, he said.
One Indian injection press maker that also imports Chinese molding machines disputed the charge that Chinese machines are dumped in the Indian market.
Chinese press makers operate at much higher volumes than Indian manufacturers, giving them cost advantages, said Milind Agnihotry, chief executive officer of marketing for plastics machinery at Electronica Machine Tools Ltd. in Pune, India.
The Indian injection press market was about 3,600 machines last year, compared with roughly 50,000 in China. Machinery industry sources in China and India said the biggest Chinese brands sold in India appear to be Ningbo Haitian Group Ltd. of Ningbo, China; Zhejiang Sound Machinery Manufacture Co. Ltd. in Hangzhou, China; and Chen Hsong Group of Hong Kong.
Electronica builds about 100 presses annually, and imports about 400 more from Haitian.
``If my cost of manufacture is not equal to the Chinese machines, that is my problem,'' Agnihotry said. ``As an engineer, if there is something new and better available, I should accept it open-heartedly. I should seek to develop better technology rather than using the government.''
Agnihotry said imports make up about 25-30 percent of all presses sold in India. Haitian accounts for nearly half of those total imports, he said.
Electronica's imports of Haitian injection presses have increased more than five-fold since they began four years ago, he said.
Chinese firms enjoy advantages in lower-cost capital than Indian firms, Agnihotry said. China also has some favorable export tax policies.
Zhejiang Sound Machinery is a major exporter of injection presses to India, but also has a factory in that country. ``However, our plant is just starting and the investigation seems to focus on shipment in 2007,'' said export manager Zhang Zhiming. ``It's still very early in the process.''
Zhang said he is headed to Beijing for an industry meeting.
``We'll have meetings with other press manufacturers in the same boat,'' he said. Zhang said there will be at least half a dozen companies at the meeting. ``We will actively respond to the case,'' he said.
Ignoring the charges could hurt Chinese firms. In a recent anti-dumping case of Chinese plastic woven sacks sold into the U.S, some Chinese manufacturers that did not respond were hit with a higher duty rate than those that got involved, said one insider.
``The industry has realized that you can't avoid dealing with these issues,'' the insider said.
Sunil Jain, president of Rajoo Engineers Ltd. of Manavadar, India, expects more Indian plastics firms to join the call for an anti-dumping investigation. Rajoo Engineers makes film and sheet lines and thermoforming machinery.
Jain said some plastics processors in India have bought Chinese-made equipment because of its low price, but then faced technical problems with the machinery. He added that some Indian plastics machine makers are importing China-made components for assembly in India.
A major U.S. press maker, Milacron Inc. of Cincinnati, set up a factory in Jiangyin, China, with partner Jiangnan Mould & Plastic Technology Co. Ltd. Milacron also has a joint venture factory in Ahmedabad, India.
``We do not intend to join the complaint,'' said Jay Woerner, vice president of manufacturing and sourcing. ``We're aware of the aggressive pricing that Chinese machines have had in India, and they've been taking an increasing share of the new machine sales. But we have no data ourselves to support it. We have suspicions of subsidies in China, but nothing more than that.''
Haitian and Chen Hsong did not return calls seeking comment.
Plastics News senior reporter Bill Bregar, correspondent Gurdip Singh, and European Plastics News senior editor David Vink contributed to this report.