Trade AgreementsIt’s impact

on Machine Tool Industry

Impact of the recently concluded trade agreements between India-Korea, India-ASEAN and India-Philippines on the custom duty for machine tool industry. Now the imports are become more cheaper than before.

Source: Ministry of Commerce, India

Custom Duty - India, Indo-ASEAN, Indo-Philippines and Indo-Korea

7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5

4.0 4.0

3.0 3.0

2.0 2.0

1.0

0.0

5.0

7.5

2.5

0.0

5.0

2.5

5.0

5.0

7.5

2.8

1.9

0.9

0.0

6.6 5.6

4.7

3.8

0

1

2

3

4

5

6

7

8

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Period

Cu

sto

m D

uty

India Indo-Asean Indo-Philippines Indo-Korea

INDO-ASEAN-CUSTOM DUTY

Source: Ministry of Commerce, India

NT-1=HS Codes 8456,8457,8458,8459,8460,8461,8462,8463,8464 & 8465 NT-2=HS Codes 8459,8460,8461 & 8465

Member countries: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand and Vietnam

Custom Duty-Indo-ASEAN

7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5

2.5 2.5

3.0 3.0

2.0 2.0

1.0

0.00.0

5.0

5.0

7.5

4.0

5.0

7.5

0

1

2

3

4

5

6

7

8

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Period

Cu

sto

m D

uty

India Indo-Asean-NT-1 Indo-Asean-NT-2

INDO-PHILIPPINES-CUSTOM DUTY

Source: Ministry of Commerce, India

NT-1=HS Codes 8456,8457,8458,8459,8460,8461,8462,8463,8464 & 8465 NT-2=HS Codes 8459,8460,8461 & 8465

Custom Duty-Indo-Philippines

7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5

5.0 5.0

4.0 4.0

3.0 3.0

2.0 2.0

1.0

5.0 5.0 5.0

4.0 4.0 4.0

3.0 3.0 3.0

2.0

0.00.0

7.5

7.5

0

1

2

3

4

5

6

7

8

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Period

Cu

sto

m D

uty

India Indo-Philippines-NT-1 Indo-Philippines-NT-2

INDO-KOREA-CUSTOM DUTY

Source: Ministry of Commerce, India

E-0= HS Code 8456 & 8464E-5=HS Code 8457,8458 & 8462E-8=HS Code 8456,8457,8458,8459,8460,8461,8462,8463 & 8465Red=HS Code 8459,8461 & 8462

Custom Duty-Indo-Korea

7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5

6.0

4.5

3.0

1.5

6.6

5.6

4.7

3.8

2.8

1.9

0.9

0.0

5.6

4.6

3.6

2.6

1.7

0.0

6.5

0.00.7

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Period

Cu

sto

m D

uty

India Indo-Korea-E-0 Indo-Korea-E-5 Indo-Korea-E-8 Indo-Korea-Red

INDO-SINGAPORE-CUSTOM DUTY

Source: Ministry of Commerce, India

HS CODE DESCRIPTION Jan-07 Jan-08 Dec-08 Dec-09 Dec-10 Dec-1184569910 OTHER MACHINE-TOOLS 7.50% 6.00% 4.50% 3.00% 1.50% 0.00%84569990 OTHER MACHINE-TOOLS 7.50% 6.00% 4.50% 3.00% 1.50% 0.00%84571010 MACHINING CENTRES 7.50% 6.00% 4.50% 3.00% 1.50% 0.00%84571020 MACHINING CENTRES 7.50% 6.00% 4.50% 3.00% 1.50% 0.00%

Custom Duty-Indo-Singapore

4.5%

3.0%

1.5%

7.5% 7.5%7.5% 7.5% 7.5% 7.5%

6.0%

0.0%

7.5%

0%

1%

2%

3%

4%

5%

6%

7%

8%

2007 2008 2009 2010 2011Period

Cu

sto

m D

uty

Singapore India

Impact

Indo-ASEAN: Member countries: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand and Vietnam

Impact: No such major impact; however watch Singapore and Thailand.

Indo-Philippines: It is part of the ASEAN Free Trade Agreement but the tariff structure is little different.

Impact: No such major impact

Indo-Korea: Korea is a big player for machine tools, after this trade agreement the tariff structure for machine tools will be subdivided into four categories as follows;

But maximum number of machine tools will be coming under E-8 Category.

Impact: Major impact

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Indo-Philippines-NT-1 7.5 5 5 4 4 3 3 2 2 1 0 0Indo-Philippines-NT-2 7.5 5 5 5 4 4 4 3 3 3 2 0

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Indo-Asean-NT-1 7.5 5 5 2.5 2.5 0 0 0 0 0 0 0Indo-Asean-NT-2 7.5 5 4 3 3 2 2 1 0 0 0 0

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Indo-Korea-E-0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0Indo-Korea-E-5 6.0 4.5 3.0 1.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0Indo-Korea-E-8 6.6 5.6 4.7 3.8 2.8 1.9 0.9 0.0 0.0 0.0 0.0 0.0Indo-Korea-Red 6.5 5.6 4.6 3.6 2.6 1.7 0.7 0.0 0.0 0.0 0.0 0.0

ImpactIndo-Singapore: It is a separate Free Trade Agreement between India and Singapore, which is already into force from 2007Impact: Watch it carefully as Singapore has got manufacture base for major machine tools companies.

Indo-Mercosur: Full Member countries: Argentina, Brazil, Paraguay and UruguayApplying for full membership: VenezuelaAssociate members: Bolivia, Chile, Colombia, Ecuador and PeruObservers: Mexico

Impact: No such major impact as the tariff reduction is for only few machine tools.84591000, 84596910, 84596920, 84596930, 84596940, 84596990, 84612019, 84622910, 84622920, 84622930, 84622990, 84629990, 84639090for these HS Codes there is a discount of 20%. Indo-EU: Member countries: Austria, Belgium, Bulgaria, Cyprus The Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, The United Kingdom.

Impact: This treaty is in a draft stage and IMTMA has already registered it’s concern to the ministry. Impact can only be known once the draft is finalised.

Agreements in the pipeline

Source: Ministry of Commerce, India

India-China•The Joint Study Group was constituted and MEA is the nodal Ministry for the JSG.•In pursuance to the recommendations of the JSG, Six meetings of the JTF have taken place. In its sixth meeting held on 21st and 22nd October, 2007 the JTF has  finalised its draft report on issues covering Trade in Goods, Trade in Services, Bilateral Investment, Trade Facilitation and Economic Co-operation.

India-Australia•India and Australia agreed in early 2008 to set up a Joint Study Group comprising government officials and research organisations to explore the feasibility of Free Trade Agreement (FTA) between the two countries. •The JSG met twice since then and has agreed to submit the Report by mid 2009.

India-New Zealand•JSG was set up in early 2008 which met thrice and has submitted the Report in February2009.

India-Indonesia•Focusing on strengthening India’s ongoing engagement with ASEAN, the two countries could also examine the possibility of entering into a bilateral comprehensive economic cooperation arrangement in the long term. •JSG was accordingly constituted in October 2007 and 4 meetings of the JSG have been held so far. The JSG is expected to submit its Report by August 2009.

Top 10-Countrywise Production of Machine Tools 2007&20081

5,8

47

15

,65

7

13

,96

5

8,2

09

5,0

00

4,3

81

4,2

34

3,7

43

1,5

40

1,2

89

41

5

14

,32

3

12

,92

3

10

,75

0

7,2

93

4,4

92

4,7

84

3,7

27

3,5

15

1,4

33

1,1

58

42

4

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000Ja

pan

Ger

man

y

Ch

ina

Ital

y

Tai

wan

Ko

rea

US

A

Sw

itze

rlan

d

Sp

ain

Bra

zil

Ind

ia

Country

Mill

ion

($

)

2008 2007

Rank18

Source: Gardner Publication, Inc

Top 10-Countrywise Consumption of Machine Tools 2007&2008

19

,36

5

9,9

50

8,0

31

6,7

56

5,8

09

3,8

04

2,8

00

2,5

47

1,8

70

1,7

74

16

,17

1

7,4

55

7,6

37

5,8

64

5,1

51

4,3

22

3,5

63

1,8

23

1,8

09

1,5

74

0

5,000

10,000

15,000

20,000

25,000

Ch

ina

Ge

rma

ny

Jap

an

US

A

Italy

Ko

rea

Ta

iwa

n

Bra

zil

Ind

ia

Fra

nce

Country

Mil

lio

n (

$)

2008 2007

Source: Gardner Publication, Inc

Rank9

References:Indo-ASEAN trade agreement; Ministry of Commercehttp://commerce.nic.in/trade/international_ta_indasean.aspIndo-Philippines trade agreement; Ministry of Commercehttp://commerce.nic.in/trade/international_ta_indasean.aspIndo-Korea trade agreement; Ministry of Commercehttp://commerce.nic.in/trade/INDIA%20KOREA%20CEPA%202009.pdfAgreements in pipeline; Ministry of Commercehttp://commerce.nic.in/trade/international_ta_pipeline.asp

HS CODE DESCRIPTION

8456Machine-tools for working any material by removal of material, by laser or other light or photon beam, ultrasonic, electro-discharge, electro-chemical, electron beam, ionic-beam or plasma arc processes

8457Machining centres, unit construction machines (single station) and multi station transfer machines for working metal

8458 Lathes (including turning centres) for removing metal

8459Machine-tools (including way-type unit head machines) drilling, boring, milling, treading or tapping by removing metal, other than lathes (including turning centres) of heading 8458

8460Machine-tools for deburring, sharpening, grinding, honing,lapping, polishing or otherwise finishing metal or cermets by means of grinding stones, abrasives or polishing products, other than gear cutting, gear grinding or gear finishing machines or heading

8461Machine-tools for planing, shaping, slotting, broaching, gear cutting, gear grinding or gear finishing, sawing, cutting-off and other machine tools working by removing metal or cermets, not elsewhere specified or included

8462Machine-tools (including presses) for working metal by forging, hammering or die-stamping; machine-tools( including presses) for working metal by bending, folding straightening, flattening, shearing, punching or notching; Presses for working metal or meta

8463 Other machine tools for working metal or cermets without removing material

8464Machine tools for working stone, ceramics, concrete, asbestos cement or like mineral materials or for cold working glass

8465Machine-tools (including machines for nailing, stapling, glueing or otherwise assembling) for working wood, cork, bone, hard rubber, hard plastics or similar hard materials