Smart Cities, increasing usage of plastics in agriculture & infrastructure, new packaging for food safety and security, affordable household goods, automobile, etc are driving consumption of plastics in India. As a result, Indian plastics machinery sector has been recording YoY growth of 12-15 per cent during the last couple of years. This shows a positive sentiment for the industry regardless of plastics ban, says Mahendra Patel, Chairman, Plastics Machinery Manufacturers Association of India (PPMAI). Growth has prompted many of the global plastics machinery makers to set up their manufacturing base in India since 2016. The Indian plastics machinery industry, estimated to be of Rs 5,000 crores, has also begun to work for Industry 4.0. In this interview with Rakesh Rao, Mahendra Patel highlights the challenges before Indian plastics machinery industry and explains how to overcome these hurdles.

 

What is the present status of Indian plastics machinery?

Plastics machinery market is approximately Rs 5,000 crores in country. Domestic production is approximately Rs 3,400 crores, with 15 manufacturers in organised sector and more than 300 manufacturers in small & medium sector. Sector employs about 1.20 lakh (direct and indirect) people. Machinery produced in India are up-to-date with current technologies of global leading brands, hence hold high potential for the sector to be a global player.

 

Plastics machineries are exported to all over the world - Africa, Middle East, South East Asia, East Europe, North & South Americas, Russia etc.  India exports plastic machineries worth Rs 1,100 crores.

 

Since 2015 situation has brightened in domestic manufacturing, especially in plastics processing. Major sectors using plastics parts (such as automotive, consumer durables, FMCG, retail, infrastructure and construction, healthcare, etc) are growing at robust pace, resulting in demand growth for plastics machinery.

 

Since the beginning of 2016, realising the high potential of India, with possibility of serving the global market from India,  many foreign companies have set up manufacturing plants in the country. Some of them are Haitian Huayuan Machinery, China (a global leader, in terms of volume, in injection moulding); Yizumi Precision Machinery, China (injection moulding); Tederic Machinery, Taiwan (injection moulding); Ningbo Shuangma Machinery, China (bole plastics injection moulding); Weltec Machinery, China (injection moulding); Theysohn Extrusion, Germany (extrusion machinery); and Illig Maschinenbau, Germany (thermoforming machinery).

Plastics machinery sector has potential to become significant part of our manufacturing economy as in industrialised countries – Germany, Italy, France, USA, Canada, Japan, China, Taiwan and South Korea.

 

Leading global brands in plastics machinery sector have manufacturing base in India through fully owned companies or joint ventures/technology tie-ups. Global majors like Milacron (USA);  Toshiba (Japan); Battenfeld (Germany/ Austria); Negri Bossi (Italy); Italtech (Italy); Rollepal (Netherlands); ASB International (Japan), etc operate directly in India. Many of the Indian companies such as Windsor, Lohia Corp, Rajoo Engineers and Steer have formed joint ventures or technology tie ups with global companies. Due to their R&D and product engineering skills, Indian companies now compete with leading players in the global market.

 

What is driving the demand for this industry?

Indian plastics machinery sector is growing at a double the rate of GDP since last few years. During last couple of years, the sector has been recording YoY growth of 12-15 per cent. This shows a positive sentiment for the industry regardless of plastics ban. Despite several hiccups like demonetization, GST etc plastics machinery sector is showing positive trends. Concepts of Smart Cities, increasing usage of plastics in agriculture, infrastructure, new packaging trends for food safety and security, affordable household goods, automobile, healthcare etc are driving growth for the plastics industry.   

 

What are the major challenges before plastics machinery manufacturers in India? How can we overcome these challenges?

High import duty on components, rise in imports of used machinery, low import duties due to free trade agreements (FTAs) and lack of skill manpower are some of the challenges before the plastic machinery sector.

 

Cost competitiveness: Machinery uses key technology components which are presently imported from Europe, Japan, Korea, Taiwan etc, which add up to 30 per cent of material cost. These imports attract 7.5 percent customs duty, thus inflate the cost. We have sent representations to the government for duty reduction on these items.

 

Used machinery imports to be discouraged: Advancement in processing machinery for enhancing the energy efficiency and productivity has happened in the recent past. Under the compulsions to reduce the carbon footprint, processors in the developed world are replacing the older machines with new technology machines. Thus, used machinery from developed world is being dumped in developing countries with attractive price tag. Used/aged machinery with old technology, if allowed to increase, will make domestic plastics processing industry inefficient and erode competitive ability in long term. We have requested the government to apply the current energy efficiency and technology standards norms to used machinery also Need to review the duty structure in FTAs & CEPA: Duty reductions to 5 per cent for extrusion machines and ‘zero’ duty on injection molding machine (IMM) due to FTAs with South Korea and ASEAN countries and CEPA (Comprehensive Economic Partnership Agreement) with Japan have put domestic machinery at disadvantage on price - especially when technology components, which are critical inputs, are levied higher import duty. The government must review and restore normal customs duties for imported plastics machineries.

 

Skill development: Plastics machinery manufacturing and processing are both a laboru intensive industry. Availability of skill manpower is major issue for the industry. Industry should partner with academia to facilitate skill development among operatives, engineers and managers.

 

In the recent months, there have been instances of plastic packaging & materials been banned by the state governments.

Will this have an impact on plastics machinery industry?

Yes. Immediate affect is not there, but in the long run, it can be foreseen that demand for some types of machines will reduce. Impact will be more for single-use plastics and thermoforming industry. People are delaying investments in plant and machinery for such products. Lifting is poor for orders, which is affecting the cash flow of industry. 

 

Industry and government have to work together to develop a proper system to reduce, reuse, recycle and recreate. Public awareness education is required for having discipline not to litter but to segregate trash at source. Plastics are now indispensable part of modern day life. There is no substitute for plastics for lower carbon footprint, convenience, public hygiene, 

ease of shaping and lowest cost of production.

 

Globally, there is a trend towards Industry 4.0, Smart Factory, etc. Is Indian plastics machinery industry geared up for this trend?

Indian industry has begun to work for Industry 4.0. Major hurdle is reliability of Internet connection, which is still not up to required standard. While machineries located at one place are being connected with data capture for ERP and such systems, remote access for trouble shooting is possible only when we have reliable Internet connection.

 

It should be noted that Industry 4.0 is a buzzword being promoted by a few European companies in field of machine controls and network hardware to promote their business. Also, there is no global standard yet for Industry 4.0. Except for a few European countries, Indian industry is more advanced than companies in many countries elsewhere.

 

What is the future of Indian plastics machinery industry?

Need for improving living standards, improving quality of life, improving cost competitiveness, improving product design, ensuring food safety and security, making healthcare affordable etc are human needs that can only be met with plastics. Hence, outlook for the Indian plastics machinery companies is bright.