Plastics Processing Machinery (PPM)Overview

• Plastics Machinery Market is Approx Rs. 4,000 Crores. Domesticproduction is Approx Rs. 2,400 Crores.

• Sector employs approx 1.20 Lakh (Direct + Indirect) people• 14 manufacturers in organized sector. Approx 200+ manufacturers in small

& medium sector• Main products include Injection Moulding Machine, Extruders, Blow

Moulding Machine, Thermoforming & Roto Moulding. Injection MouldingMachine accounts for 70% of total Indian Plastics Processing MachineryIndustry

• Plastics machineries are exported to Africa, Middle East, South East Asia,North & South America and Russia. Exports value Approx Rs. 700 Crores

• Machinery produced in India are of current technologies of global leadingbrands, hence holds high potential for the sector to be a global player

Plastics Processing MachineryIssues being Faced

• High imports and dumping despite industry having sufficientor significant surplus capacities

• Fresh dumping by other countries, apart from China• Decline in Demand – Capacities remain under utilized• Imports of used plastics processing machineries- not only

causing damage to Industry’s market share, but also inducingprocesser inefficiencies

• Machinery manufacturers Imports around 30% of their partsrequired in construction of machine which are not producedin India leads to high cost of production

Plastics Processing MachineryIssues being Faced

• Inverted Duty Structure – India has entered FTA where SomePlastics machinery are allowed to import at zero customsduty, but, parts attract 7.5% to 10% import duties

• Limited export benefit under Foreign Trade Policy• Unavailability of Technology Development Fund• Skilled manpower in short supply

Plastics Processing MachineryRequests under Make in India ideology

Pre Budget Proposal• Impose restriction on used machinery imports• Reduce customs duty on parts & components• Introduce GST• Include products under Focus Product Scheme & Focus

Market Scheme for export benefits• Give loans at Subsidized interest rate to processors for

investment in technology machines• Create Technology Development Fund for machinery

manufacturers

Plastics Processing MachineryRequests Made- Any Relief?

Union Budget 2015- 16• Impose restriction on used machinery imports – No• Reduce customs duty on parts & components – No• Introduce GST - Yes (to be implemented next year)• Include products under Focus Product Scheme & Focus

Market Scheme for export benefits - FTP to be announced• Give loans at Subsidized interest rate to processors for

investment in technology machines - No• Create Technology Development Fund for machinery

manufacturers - No

Reques Made p e budge nve ed Du y S uc u e anoma y o beco ec ed by educ ng mpo du es on ce a n pa s and componen sbased on ecommenda ons made by Ta Comm ss on who hadconduc ed a s udy and de e m ned ha DS ex s s n p as cs p ocess ngmach ne y sec o

Plastics Processing MachineryIDS Request, Pre BudgetUnion Budget 2015- 16

• Import duties on Plastics Processing Machineries due to tradeagreements have been reduced considerably, in most cases to0%

• Import duties on parts and components however is in therange- 7.5% to 10%Request Made pre budget: Inverted Duty Structure anomaly to becorrected by reducing import duties on certain parts and componentsbased on recommendations made by Tariff Commission who hadconducted a study and determined that IDS exists in plastics processingmachinery sector

• NoRelief to Plastics Processing Machinery sector in this regardhas been announced in Union Budget 2015- 16

Inverted DutyFacts & Concerns

Input materials & imports of finished goodsMajor Supplying Countries

• Plastic Processing Machinery industry gets its major supply ofinput materials from Germany, Austria, USA, Switzerland,Japan, South Korea, Taiwan and China

• Around 45% of its finished goods (Plastics machinery) importsare from China, Japan, South Korea and ASEAN- with whichIndia has operational trade agreements

• Therefore, essentially all its input materials supply come fromcountries with which India does not have trade agreement,except Japan (India - Japan CEPA), South Korea (India - KoreaCEPA & APTA) and China (APTA), which command only 20% ofindustry’s total input material requirement

China, Japan & South KoreaDuty Structure under Trade Agreements

SN TradeAgreement

2014, Preferential Duty onInput Materials

2014, Preferential Duty onFinished Goods

1 India- JapanCEPA

4.8% to 6.4% 2.5% on injection mouldingmachines. No concession onimports of extrusion machines.4.8% on other machines forworking plastic

2 India- KoreaCEPA

4.69% to 7.81% No preferential duty on imports ofinjection moulding machines.4.69% to 7.81% on other machinesfor working plastic

3 APTA (coveringChina)

No concession on imports onmajority of the inputmaterials

No preferential duty on imports ofmachines for working plastic,except extrusion machines (15%concessions on basic import duty)

Preferential Duty (%) as against Basic Duty of 7.5%Finished Goods

SN TradeAgreement

2011 2012 2013 2014 Comments

1 India- ASEANFTA

5.00 2.50 2.50 0.00 All Finished Goods

2 India- JapanCEPA

6.30- 6.80 5.00- 6.10 3.80- 5.50 2.50- 4.80

Avg. 6.55 5.55 4.65 3.65 All Finished Goods exceptExtrusion Machines

3 India- KoreaCEPA

9.38- 10.63 7.81- 9.69 6.25- 8.75 4.69- 7.81

Avg. 10.01 8.75 7.50 6.25 All Finished Goods exceptInjection MouldingMachines

4 China 6.38 6.38 6.38 6.38 Only Extrusion Machines

Effect of Inverted Duty• There is absolute percentage difference in certain cases, like

Japan, as regards preferential duty on input material and finishedgoods (preferential duty on input material > finished goods)

• Around 80% of industry’s input material come from countries withwhich India does not have any trade agreements, and hence, nocost advantage

• Around 45% of industry finished good imports come fromcountries with which India has trade agreements, and hence, priceincompetitiveness

• Import duty on all finished machinery for working plastic andalmost all input material is ‘zero’ under India- ASEAN FTA;however, no significant supply of input material from ASEAN-posing a threat to domestic industry

Imports of Plastics Processing Machinery from ASEAN(0% current import duty)

Source: DGCI&S

Ease of Doing of Business

Presented by:

Plastics Machinery Manufacturing

Association of India

Policy Change for Ease of Doing Business

• Make Land Acquisition easy & Hassle free, Best options is Government

create land bank and then allocate to Industry on need basis

• After allocation if Industrial unit is not set up in 2/3 years, then that land

should be taken back by Government. This will help in maximum

productive utilization of land.

• Self declaration form should be introduced for all requirements for factory

setup, Industry is responsible for following all norms and compliances.

• Labour laws should be industry & worker friendly

• Skill development – Industry & Institute participation for industry ready

manpower development program should be launched

– Government should make mandatory for industry to train certain number of ITI’s and

the burden shall be shared by Government & Industry

Policy Change for Ease of Doing Business

• Judicial reforms: Quick & Time bound disposal of cases in all areas of

departmental litigation such as Income Tax, Excise, Customs and Sales Tax. If

previous court decision for the similar matter available, then no further

litigation should be allowed. Disposal of all the cases in courts in time bound

manner and fixed the time limit for disposing of the cases.

• Accountability of Government Officials should be clearly defined.

• Dishonour of Cheque: Benefits of Post dated cheques (PDC) is taken away by

the Supreme court decision under section 138 of negotiable instrument act.

The place of filing the complaint should be the place of beneficiaries of the

negotiable instrument.

• Timely issue of “C” forms by all states or abolition of “C” forms

• 24 X 7 Custom Clearance on all the ports

• Easy process for Advance license application and claiming benefits

• Direct credit of export benefit, duty on EEPC and duty rebates

Policy Change for Ease of Doing Business

• TDS on technical services received from abroad (25% new budget proposal is

10%) – to be abolished

• No Restriction on input tax credit for interstate sales for state VAT

• Maintenance of records in soft forms for Government statutory data needs

• Uninterrupted Power supply for industry

• Abolish ESI and replace it with Medical Insurance

• Infrastructure support for approach roads in industrial area, water, electricity

& Sewage by local body

• Remove Inverted duties: Plastics machineries are imported at reduced

customs duty under FTA, whereas Parts are imported at full customs duty.

Current budget has given relief for certain parts, but this benefit is applicable

for Machine Tools industry only.

Policy Change for Ease of Doing Business

• Government should prepare data bank of all sick/closed units

in the state

• Government should help convert these closed units to

operative units by,

– Selling property to prospective buyer who is interested in setting up

unit

– Property bought by new buyer should be free from all the

encumbrances such as Old dues pending for Municipal Corporation,

Electricity company etc.

– Power, Water & any permission under the local body should be given

under priority and delay under any pretext should attract the legal

action against the service provider

On the letter head

Date: 25th March 2015

To, Shri Sushil Lakra Industrial Adviser, Department of Heavy Industries Ministry of Commerce & Industry, Government of India New Delhi- 110001 Subject: - inputs ref. DRPSC meeting held on 24th March, 2015 Dear Sir, We the Plastics Machinery Manufacturers Association of India is an industry-body representing all plastics machinery manufacturing organisations in India. PMMAI was formed with the objective to promote the advancement of plastics machinery manufacturing industry and also to promote common interest of constituents of plastics machinery manufacturing industry comprising of primary processing machinery, post forming processing machinery and auxiliary equipment used in pre and post forming operations etc. in the fields of economy, technology and science through cooperation and coordination at national and international level and train people for the industry with required skills. This is with reference to the communication received in the matter of inputs required based on the Department Related Parliament Standing Committee meeting held on 24th March, 2015. Following, we wish to bring to your notice industry potential, the issues being faced by this industry and proposals for ease of doing business as per enclosed Annexure I and Annexure II.

A. Industry Potential

Sno. Question Response Facts

1 Strength Large number of manufacturers 14 in organized and 200+ in small and medium sector

2 Technology High potential to be a global player

Machines produced are at par with current global standards

3 Main Products Injection Moulding Machine, Extrusion Machine, Blow Moulding Machine, Thermoforming & Roto Moulding

Injection Moulding Machine accounts for around 70% of total Plastics Processing Machinery sector

4 Industry Exports

Huge potential Export earnings of $100 million+

5 Major Export Destinations

Africa, Middle East, South East Asia, North & South America

Exports value Approx. 700 crores

Sno. Question Response Facts

6 Employment Significant 1.20 Lakh (Direct + Indirect)

B. Industry Issues

Sno. Issue Facts

1 High imports Industry has significant surplus capacities

2 Dumping China is attracting ADD; investigation underway as regards dumping from Malaysia, Philippines, Taiwan and Vietnam

3 Decline in Demand -

4 Imports of used machines More than 30% of imported machines are second hand

5 Unavailability of parts and components

Industry imports around 30% of parts and components

6 Inverted Duty Structure Machines attracting 0% import duty under major operational trade agreements, whereas, parts and components (which come mainly from non FTA countries) attracting 7.5% to 10% import duty

7 Unavailability of Technology Development Fund

Plastics processing machinery global industry is fast growing in terms of technology. India needs to keep up with this growing technology trend

8 Skilled Manpower in short supply

Lack of training institutes and institutes with facilities meeting global standards

C. Proposals to rectify Industry issues

Plastics Processing Industry as earlier proposed, once again proposes following for rectification of the issues being faced by this industry.

i. Import restriction on used machines: Used machines should be banned. Or at least, Indian Tariff Classification should be modified to accommodate separate codes for used machines on which tariff (customs duty) should be of the order of 70%+ of original machinery price

ii. Reduce custom duties on parts and components: Around 45%+ imports of finished goods (machines) are from China, Japan, South Korea and ASEAN with which India has trade agreements. In most cases import duties on machines are either 0% or too low. Whereas, around 80% parts and components (inputs materials) for manufacturing of machines come from countries with which India does not have trade agreements. The situation as explained above has created inverted duty structure in this sector.

iii. Other proposals: a) Fast Track anti dumping investigations b) Give loan at subsidized interest rates to processors for

investment in technology machines c) Create or help industry to create Technology Development Fund

D. Proposals for Ease of doing Business

Plastics Processing Industry proposes following for an environment which is conducive and at the same time makes the business activities easy.

i. Creation of land bank: This will make land acquisition easy and hassle free. Government can create land bank and then allocate to industry on need basis. After allocation of land, if industrial unit is not set up in a stipulated time frame, then that land should be taken back. This will ensure maximum productive utilization of land

ii. Labour and industry friendly labour laws and Judicial reforms:

For the purpose of judicial reforms, it is requested that there should be a provision for quick and time bound disposal of cases in all areas of department litigation

iii. Skill Development: Industry and institute shall together work towards creation of ready manpower. Government should work with the industry to create training centres, and make mandatory for the industry to train certain number of ITIs

iv. Other Proposals: a) Accountability of Government Officials should be clearly defined b) Timely issue of “C” forms by all states or abolition of “C” forms c) 24X7 customs clearance on all the ports d) Easy process for Advance License application and claiming

benefits e) Direct credit of export benefit, duty on EEPC and duty rebates f) TDS on technical services received to be abolished g) No restriction on input tax credit for interstate sales for state

VAT h) Maintenance of records in soft forms for Government statutory

data needs i) Infrastructure support, including transport modes, water,

electricity, etc

E. Request: This industry has approached the Govt. at various levels and have earlier also brought these critical issues to their notice and in discussions at various occasions. We hope that Govt. considers major issues being faced by this

young but globally recognized Indian Industry, and help in reaching its potential, more importantly under “Make in India” ideology Yours Truly, With Regards,