MSMEs need protection from foreign players

Samir V Limaye, President, Institute of Packaging Machinery Manufacturers of India, tells TPCI that the economic slowdown has tremendously impacted the capacity utilisation of each factory. He also speaks about the need to monitor the import of equipment from countries with which we have an MFN treaty, since it could be a channel to reroute goods from China.

TPCI: What kind of considerations does the packaging industry have when catering to the different needs of the customers in India & abroad?
Mr. Samir V Limaye (SVL): In terms of packaging machinery, the considerations are fairly simple. In terms of the speed, sophistication and styling – most of this equipment is high value equipment. These machines typically have a productive life ranging between 10-20 years, where an end user (food/pharma/beverage company) is using these machines. So, maintenance, life of the equipment, spare parts as well as service support are primary consideration. In terms of the buying behaviour of the customer (it is an industrial customer & this is a B2B sale), the speed, sophistication and style are the main considerations.

TPCI: What are the dynamic trends emerging in technical standards pertaining to packaging? How does the institute help in generating awareness about the same?
SVL: As a part of an institute, which is representing machinery manufacturers in India, we work very closely with institutes like Indian Institute of Packaging or SIA School of Packaging in Mumbai; as well as various other institutes which deal with GMP requirements, USFDA requirements, or in terms of certification or accreditation and consultancy. More specifically, for food, there are different standards and there’s a long list for that. Pharma & beverages industries also have specific standards. In fact, as we see, as machine manufacturers, most of these standards are going to converge and eventually all human consumption items – be it food, beverages, pharma or cosmetics – are going to have one unified standard, which will emerge over a period of time.

Currently, our association has not made any checklist/standard, which we can issue. We mostly follow the global standards and ask our member companies to follow those standards, which are dictated by the international community in terms of design qualification documents, process qualification documents, & insolation qualification documents.    

TPCI: What are the major challenges faced by the Indian packaging industry in India? How does it fare on an international scale? Does it face any significant tariff or non-tariff barriers?
SVL: Since the nature of the business is building capital machinery, the capital machines need to have perspective w.r.t. the kind of application, product packaging, cost parameters, safety standards, etc. that they need to meet. Ultimately, it boils down to innovation and R&D and understanding the life cycle of an individual product. I am referring here to a packaging machine – a coffee packing machine or a rice packing machine or a machine which is used for packing ginger/tomato paste. We need to understand the behaviour of the product, which needs to be packed, in line with the speed & sophistication to deal with that product. A huge amount of investment is needed for R&D in terms of developing pictures, fabrication, tooling, having small & medium enterprise who act as our vendors. So, there is a huge value chain that actually helps machine manufacturers to make machines and sell in international market. So, managing that supply chain and manufacturing those investments for innovation & R&D are the main challenges that we see for Indian companies.

TPCI: What impact has the slowdown of the economy had on the packaging industry? How is the industry trying to tackle it and what suggestions does it have for the government?
SVL: All the members of IPMMI are in the business of providing capital machinery. Capital machinery is purchased only when there is a capacity expansion being planned. It is purchased only if there is a new variant or an SKU (stock keeping unit) or a new product being launched and the current machinery is not being able to support that. Thirdly, capital machinery is only purchased when the life of the equipment is already over and you would like to replace it.

Economic slowdown, in terms of the human consumption, as we see in the last few months, has tremendously impacted the capacity utilisation of each factory. If food, pharma, beverages & cosmetics industries are just operating at just 50-60% of the capacity utilisation, no one is going to think of capex. Typically, capex gets triggered the moment it reaches 75-80% of its utilisation. So, companies plan in advance, keeping in mind the current scenario & situations.

In the context of tariff and non-tariff barriers, I would like to say that there was a time, when we would have tremendous pressure from Chinese imports of packaging machines. Currently, however, we do not see those problems; but we need to review that list once again. There are specific categories where privileges were given by our government to Chinese machinery manufacturers, which impact our MSME & SME machine manufacturers.

TPCI: While other industries like steel, pharma, textiles and electronics have expressed reservations on India’s entry into RCEP (which is temporarily on hold), what is the viewpoint of the packaging industry?
SVL: If the situation changes, where we have the Most Favoured Nation relationship with ASEAN or a South East Asian country and a dominant player like China gives equipment to those countries, and they send the equipment to India because of the MFN treaty, it is definitely going to impact us. A few days ago, we were very seriously reviewing that list where the import duty and the landed cost of some of the machines for food and processed food related industry were so low that it was a threat to India’s MSMEs & SMEs in this sector. Since MSMEs are the backbone of our country, they need protection from foreign players.

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Samir V Limaye is currently serving as the President of Institute of Packaging Machinery Manufacturers of India and the Vice-President of Wimco Limited. In the past, he has worked with other notable organisations like Cosmo Films Limited, ITW Signode India Ltd & ITW India Limited. He was awarded Udyog Rattan by Institute Of Economic Studies in 2012 for his distinguished knowledge and vast experience.