CICU slams plan to ban used machinery imports

He further said that the idea that growth need necessarily be at high cost with gleaming new equipment is absurd. The fact of the matter is that there is huge recurring demand for second-hand machinery in Indian industry,to keep upfront costs low,for instance,or simply because of local non-availability.

Upkar Singh Joint Secretary said that to cope up with the changing time,sizable number of MSMEs has started technology up gradation by importing second hand plant and machinery.

The propose ban will greatly affect the already reeling MSME Sector in this adverse economic scenario. Clamping down on such imports would actually limit production and almost certainly nip demand for producer goods as well.

It is to be noted that some 80 per cent of shuttle-less looms in the textile sector are second-hand equipment,some three-fourths of construction equipment like cranes are similarly procured,as are almost half of all machine tools.

The point is that there are clear gains from trade in using second-hand capital goods for domestic manufacture specially MSMEs.

He further said that the proposed ban violates the concept of free trade agreement on such imports. Building new technology by installing first hand high cost plant and machinery is a very costly proposition for MSME Sector.

There is need for formulation of rules for the import of second hand equipment to strengthen and standardise their inspection and administration of importation to safeguard the safety and quality. But a blanket ban on imports of dated machinery would likely guarantee a high-cost industrial economy.

The Central Government is also reportedly planning to slap import duty on 75 per cent of the original value of second-hand machinery proposed to be imported.

To evaluate the age of machinery is a controversial issue involving corrupt practices. CICU has already submitted presentation to Director General Foreign Trade (DGFT) that blanket ban on capital goods imports should not be imposed.