Kicking off the opening of a large Indian plastics trade show, a Chinese government trade official called for the Indian government to remove its heavy tariffs on Chinese injection molding machines.
While the comments did not constitute a new position for China, raising them at the Jan. 20 opening ceremony of Plastivision 2011, India's second-largest plastics show, seemed to suggest the importance of the issue for China, and the importance of India's rapidly expanding market for Chinese firms.
India's government in 2009 imposed anti-dumping penalties of up to 223 percent on Chinese-made injection molding machines, saying that they were flooding the market, hurting the profitability and market share of local manufacturers.
The steep Indian tariff has in fact made it prohibitive for many Chinese companies to sell their presses there, but it also hurts India's own plastics molding firms and consumers because there is not enough machinery production in India to meet local demand, said Niu Qingbao, China's consul-general in Mumbai.
I sincerely hope and believe that the obstacles will be removed, Niu told a gathering of industry dignitaries at the Plastivision opening ceremony. I think many people would agree with me that any tariffs put on Chinese plastics machinery will hurt not only Chinese manufacturers of these machines but also corporate customers [who buy the machines] and consumers of plastic products.
China accounts for about 25 percent of the world's plastics machinery production, and exports about half of its production, Niu said.
[Chinese machines] may not be the most advanced in technology but they are very cost-effective, Niu said.
None of the Indian speakers at the ceremony addressed Niu's comments directly, and a spokesman for the trade show organizer, the All India Plastics Manufacturers' Association, said afterward it is hard for the Indian group to respond because its members are divided on the issue.
In general, machinery makers are in favor of the duties, but some processors want them removed, said Jayesh Rambhia, spokesman for Mumbai-based AIPMA.
In comments at the show, held Jan. 20-24 in Mumbai, some Indian machinery officials said they think Chinese firms have an unfair advantage in world markets because the Chinese government has undervalued its currency.
And some Indian companies in other industry segments complained that Chinese firms can sell their finished products in India for the cost of what Indians pay for resin.
The issue is a sensitive one, with most Indian industry officials in the tight-knit plastics community saying they did not want to discuss it publicly.
One Indian trade association official, however, said he thinks the Indian government's decision in effect raised prices for domestic molding companies, hurting their competitiveness.
While the two sides sparred over the anti-dumping duties, trade between the two largest rising economies in the developing world is expanding rapidly, and both Niu and Indian officials at the ceremony stressed the potential for the two industries to work together.
Bilateral trade between the two countries is expected to hit $100 billion by 2015, not just in plastics but overall, roughly four times what it was in 2006.
India's market could become the third-largest in the world for plastics next year, after the U.S. and China, according to figures from Plastivision organizers.
Niu, in his comments, encouraged Chinese firms to set up manufacturing in India, in addition to exporting products.
India's per capita consumption of plastic is expected to double in the next five years, from 8 kilograms to about 16 kilograms, Plastivision organizers said.
India's plastics industry grew about 20 percent last year, show officials said, and the Plastivision show itself saw the number of exhibitors grow almost 60 percent, to 975 companies, compared with the last time the show was held, in 2007. Organizers expected about 75,000 people to attend the five-day show.
The show included pavilions of firms from China, Taiwan, South Korea and the United Kingdom.