BAN on Import of Used Machines: A Hindrance on Growth

With India struggling with improvisation and up -gradation of machine industry, imposing ban on used process plant and machinery will certainly hammer the production and the manufacturing sectors in India. Upkar Singh, Joint Secretary, Chamber of Industrial Commerce Undertakings, urges government to reconsider the decision which is on hold.

The chemical industry world-wide have witnessed a reversal in fortunes with rising profit, including US chemical industry which recently bounced back after a huge set back. Even though, statistically there has been growth in the industry, the recovery has failed to boost aggregate capital spending and R & D spending. Chemical industries while dealing with production of chemical also have to deal with the process plant and machineries. The market for process plant and machinery in India is a very heterogeneous and has improvised on a larger scale but some of the hindrance still persists. Indian Process Plant and Machinery industry estimates capacity of USD 6 billion per annum which is leading to a significant contribution in establishing the Indian Process Industry.

Imports in India have increased from USD 33833.20 million in November, 2013 to USD 36486.30 million, December, 2013. As per the Indian Ministry of Commerce and Industry s report, imports in India have recorded all time high since August, 1958. India is highly dependent on foreign coal, oil and machinery for its industrial needs. (Reference: Trading Economics)

The process plant and machinery industry caters to a wide range of process industries such as petroleum refining, oil and gas, fertilisers, chemicals, metal industry, petrochemicals, pharmaceuticals, etc, with specially designed and manufactured equipment and systems. With the high capital as well as labour concentrated sector, process plant and machinery With India struggling with improvisation and up -gradation of machine industry, imposing ban on used process plant and machinery will certainly hammer the production and the manufacturing sectors in India. Upkar Singh, Joint Secretary, Chamber of Industrial Commerce Undertakings, urges government to reconsider the decision which is on hold. industry have a strong engineering orientation wherein most of the products are customised. Thus scale of economy in this sector has less relevance and suffered crisis.

Due to lack of development in technology and quality of machines, companies started importing used process plants and machines from various countries. The decision to ban import of used plants and machinery have shook the major user industries whereas the government stresses the move aims to safeguard the productivity and competitiveness of Indian manufacturers.

Upkar Singh, Joint Secretary, Chamber of Industrial Commerce Undertakings, widely criticises the decision of ban on imports of plant and machinery. Defending the user industry, he states that the ban will drastically lead to unemployment and corruption in this industry. The used plants and machines which smoothly functions even after first hand use of 10 years still cannot match the quality of Indian machines. With total 25 percent of used plant and machinery market in India, it almost covers 1/4th of the Indian market .

The trend has been evolving and in the current scenario, heavy machines are highly in demand globally. And over the past few decades the process plant and equipment manufacturers have witnessed fragmentation mainly because of the shift in the base of manufacturing and the emergence of new companies. Singh refers, European Union, Russia, Germany and US as the key suppliers of second hand process plant equipment and machinery to other countries whereas . Second hand equipment from Japan Korea & Europe is very good in quality, whereas similar equipment from China is poor in quality and has very short life span.

On behalf of user industry, Singh precisely states that this ban will create a major hurdle for user industry since they are already struggling with unfavourable power policy and high rate of interest on capital goods. He further mentions that clinching down on such imports would actually limit production and almost certainly squeeze demand for producer goods as well. Secondly, the user industry will have to compromise on the quality of machines eventually impacting the production percentage. There is huge recurring demand for second-hand machinery in Indian industry, to keep up front costs low, for instance, or simply because of local unavailability. The ban will impact approximately 5 percent of country s production.

Speaking on lack of development in technology, Singh mentions that India still requires 20 to 25 years to bridge the gap and compete with foreign manufactures. India has succeeded in various sectors and positioning our self globally but in the process plant and machinery industry there is long battle waiting in the future. Singh suggest that it is essential to establish cordial relations between academic institutions and organisations to innovate technologies which will lead proficiently globally and overcome the idea of reverse engineering concept.