India's preliminary decision to impose anti-dumping duties of up to 223 percent on Chinese-made injection molding machines has spurred strong reactions from China and India. Some industry insiders say the move will hurt Chinese machinery exports and their customers in India. Whether it will benefit India's domestic machinery sector is in debate.
New Delhi started its investigation in July and released the preliminary findings in February. L&T Demag Plastics Machinery Ltd. filed the complaint triggering the probe. L&T Demag in Chennai, India, is a 50-50 joint venture between Larsen & Toubro Ltd. of Mumbai and Demag Plastics Group, a Schwaig, Germany-based press maker that was bought by Japan's Sumitomo Heavy Industries Ltd. in early 2008.
In its complaint, L&T Demag said cheap Chinese imports have caused material injury to India's injection press industry, including declining market share and lower profitability. The company did not reply to e-mailed questions from Plastics News.
India has levied tariffs from between 76 percent and 223 percent on 10 Chinese firms. Three are associated with China's largest press maker, Ningbo Haitian Plastic Machinery Group.
Haitian Executive Vice President Helmar Franz said the duty recommendation from India's Department of Commerce is awaiting approval and not yet in effect.
But India's Ministry of Finance is expected to approve the duties within 40 days of the recommendation, according to Zhang Zhiming, export manager of Zhejiang Sound Machinery Manufacture Co. Ltd. After that, Indian Customs will charge “duty deposits” on Chinese presses, which will be adjusted upon a final ruling.
“The final rate they'll use ... is whichever is lower between the preliminary and the final ruling,” Zhang said.
India imposed a 163 percent duty on Zhejiang Sound presses. Zhang said the firm plans to take its Indian customers and sales reps to the government hearing.
Electronica Machine Tools Ltd. of Pune, India, intends to submit evidence indicating that Chinese presses are not sold in India for less than they are sold in China. Milind Agnihotry, chief executive officer of marketing for Electronica's plastics machinery division, also argued that the Indian government decision does not sufficiently recognize different technologies used in injection presses and lumps them together.
Electronica is partnering with Haitian to assemble presses in Pune. Franz stressed that his Haitian's move to establish local manufacturing in India was not motivated by the investigation.
The trade barrier may force more Chinese manufacturers to build plants in India, said N.K. Balgi, president of Ferromatik Milacron India Ltd. in Ahmedabad. The joint venture of Milacron Inc. and India's Mahendra N. Patel Family Group has not been affected much by Chinese imports since it sells customized machines.
Some Chinese firms, however, are worried that India may take measures to prevent them from assembling presses there. Zhejiang Sound, which is launching an assembly operation with a local Indian partner, believes the anti-dumping duties may be extended to machine components.
“My lawyer warned me on that. Apparently there have been such precedents,” Zhang said.
Guangzhou Borch Machinery Co. Ltd., which received the lowest duty rate of the 10 firms, said the 76 percent duty still would make it economically impossible to export presses to India.
“It's way too early to talk about setting up factories over there. It's not a simple task. Right now, we just want justice,” said export manager Tang Xiaojun.
Supporters of the anti-dumping charges include industry leader Windsor Machines Ltd. in Mumbai. “Every country has to support its industry and look after its interests,'' said international sales manager Santosh Salins.
If Chinese press sales in India dip, non-Indian competitors may benefit, including those in Hong Kong, Taiwan, South Korea and Japan. Among them could be Hong Kong's Chen Hsong Group, which makes presses in Hong Kong and mainland China. According to industry sources, Haitian, Sound and Chen Hsong are the largest Chinese exporters of presses to India.
Taiwanese presses typically cost 15-20 percent more than Chinese ones, so a hefty anti-dumping duty could benefit Taiwanese companies.
A Toshiba distributor in India believes the move also will hurt foreign firms making presses in China. “Toshiba exports all-electric machines from its Shanghai plant to India,” said Sunil Harkar, who asked that his company name be withheld.
“They are more expensive than any other locally made machine in India. In an energy-scare country like India, our machines are doing great service. We request the Indian government to make such energy-efficient machines duty-free.”
Sumitomo does not make presses in China. Demag said its factory in Ningbo, China, does not export presses to India.
Zhang claims the anti-dumping charge will hurt Indian plastics processors, as well. “The injection molding machinery industry in India may involve 2,000-3,000 jobs, but the injection molding industry has 10 times of that employment or more,” he said.
Ganpat Jain, proprietor of Bangalore, India-based injection molder V.S. Plastic Co. Ltd., agreed. “By imposing the anti-dumping duty on Chinese presses, the government will be killing a bigger industry by providing protection to a handful of Indian press manufacturers,” he said.
An industry official in Beijing, who requested anonymity, said his organization had contacted plastics industry leaders in India.
“They agree the move is inappropriate,” the official said. “We believe that the Indian government's attitude differs from the Indian plastic industry's opinion. Moreover, anti-dumping cases should be handled within the framework of [the World Trade Organization].”
Zhang said Chinese machinery makers should work together to challenge L&T Demag's complaint and force the Indian government to cancel the case.
Plastics News Asia bureau chief Steve Toloken contributed to this report.