In recent years, South Africa has been progressively more interested in developing its trade, particularly with other

developing countries, including Brazil, India and China. The trade deficit with these countries has been widening dramatically over this period, whilst South Africa itself is keen to increase its exports to these three partners. Currently exports to these countries are primarily resource-based, with the predominant categories of exports being: HS27: Mineral fuels and oils; HS72: Iron and steel and HS76: Aluminum and articles thereof. On the import side, advanced manufactures dominate trade, though it is of interest to note that 9% of imports from India are of HS72: Iron and steel and that 10% of trade with Brazil is of HS2: Meat and edible meat products. Around 18% of imports from China are of clothing and footwear and another 41% is of advanced manufactures including machinery.

Structureof exports,1992 - 2006 (R-million) HS Code 1992 Expo rts (Rm) 2,083 174 Sha re (%) 3.0 0.3 1996 Expo rts (Rm) 6,464 589 3 Sha re (%) 5.6 0.5 2001 Expo rts (Rm) 23,02 3 1,224 27 Sha re (%) 9.2 0.5 2006 Expo rts (Rm) 39,44 2 2,018 16 Sha re (%) 9.9 0.5

Ch 16: Machinery Ch 18: Scientific equipme nt Ch 23: Special class. of m otor parts

exports of particularly machinery and vehicles have increased since 1992. These account for the greatest share of manufacturing exports. Imports are primarily of manufactured goods, of which the majority are technology and capital intensive goods, including machinery, vehicles and scientific equipment. Imports of machinery are mainly driven by increased investments of local firms.

Structureof imports,1992 - 2006 (R-million) HS Code 1992 Expo rts (Rm) 14,71 9 1,649 Sha re (%) 31.6 3.5 1996 Expo rts (Rm) 36,71 0 4,611 9,954 Sha re (%) 32.3 4.1 8.8 2001 Expo rts (Rm) 60,07 7 8,382 18,41 3 Sha re (%) 27.8 3.9 8.5 2006 Expo rts (Rm) 120,9 45 14,87 0 35,33 6 Sha re (%) 26.0 3.2

Ch 16: Machinery Ch 18: Scientific equipme nt Ch 23: Special class. of m otor parts

Most South African exports are destined for developed markets, primarily within the EU, but also Eastern Asia and the North American Free Trade Area (NAFTA). China, Australia, India and Angola are today key destinations for South African exports, China has also become a dominant source of imports for South Africa, as has India.

Trade by country: exports and imports eith india, 2006

Rank 18

Exports 5576

% 1.4

Rank 11

Imports 10960

% 2.4

Exports to SADC consist of more advanced manufactured goods, which require inputs of highly-skilled labour and capital, including machinery and vehicles. South Africa imports a large proportion of the machinery needed for manufacturing from the EU and the US. Trade with significant trading partners: exports and imports, 1992 - 2006 (R-million) 1992 H84: Machinery H85: Electrical machiner y H86: Railway locomotives H98: Vehicle parts EXPORT(RM) EU NAFTA 510 156 (32.90%) (10.05%) 207 (48.40% ) SADC 704 (45.46%) 195 (36.43%) IMPORT(RM) EU NAFTA 5,688 1,952 (53.46%) (18.35%) 1,932 563 (47.35%) (13.80%) SADC 26 (0.64%)

1996 H84: Machinery H85: Electrical machiner y H86: Railway locomotives H98: Vehicle parts 2006 H84: Machinery H85: Electrical machiner y H86: Railway locomotives H98: Vehicle parts

EU 1400 (30.25%) 737 (40.14%)

NAFTA 508.67 (10.99% )

SADC 1674.20 (36.18%) 605.20 (32.95%)

EU 13050 (54.41% ) 6996 (54.97% )

NAFTA 4308.47 (17.96% ) 1680.32 (13.20% )

SADC 39.99 (0.17%)

197.66 (18.62% ) EU 17920 (57.49% ) 2762 (33.40% ) NAFTA 2917 (9.36%) SADC 4876 (15.64% ) 2209 (26.72% ) 4596 EU 35726 (47.87% ) 19533 (42.18% ) 16670 (47.18% ) NAFTA 11042 (14.79% ) 3747 (8.09%) 1682 (4.76%) SADC

225 (0.48%)

South Africas 20 largest exports at the HS6 level, 1992 - 2006 (R-billion) HS 842139 Description Filtering purifying machinery gases 1992 or 0.1 for 1996 0.5 2001 9.0 2006 15.8

Fastest growing exports, 1992 - 1996 and 2001 - 2006 (R-million) H8544:Insulated (Incl. Enamelled Or Anodise d) Wire Cable (Incl.Co-Axial Cable) And Other Insulated Electric Conductors H9031:MeasuringOr Checkinginstruments Applia 20.2 nces And Machines H8479:MachinesAnd Mechanical Appliances Havi 46.8 ng Individualfunctions H8525:Transmission ApparatusFor Radio-Broadcasting 26.1 1992 38.2 1996 228. 0 109.8 213.6 141.2 Growth(%) 42.95 40.30 35.40 40.16

Or Television H8407:SparkIgnition reciprocating Or Rotary InternalCo mbustionPiston Engines. H8501:ElectricalMotorsAndgenerators (Excl. Generating 1114.0 778.0 Sets). H8541:Diodes,Transistorsand SimilarSemi- ConductorD 109.8 698.4 evices 2001 123.7 2006 Growth(%) 1359.5 61.52 47.51 44.77

Fastest growing imports, 1992 - 1996 and 2001 - 2006 (R-million)

H8525:Transmission ApparatusFor Radio-Broadcasting Or Television H8439:MachineryFor MakingPulp Of FibrousCellulosicmaterial H8528:MonitorsAnd Projectors,Not Incorporating TelevisionReceptionApparatus H8426:Ships'Derricks;Cranes Incl. Cable Cranes; H8417:IndustrialOr LaboratoryFurnacesAnd Ovens H8427:OrkLiftTrucks;Other WorksTrucksFitted With Lifting Or HandlingEquipment H8429:SelfPropelled Bulldozers angledozers Graders Levellers Scrapers Mechanical Shovels Excavators Shovelloaders Tamping Machines And Road Rollers H8518:Microphones, Loudspeakers, :Headphones And Earphones H8502:ElectricGeneratingSets And Rotaryconverters. H8478:MachineryFor PreparingOr MakingUp Tobacco H8467:Tools For W orkingIn The Hand H8426:Ships' Derricks;Cranes Incl. Cable Cranes;MobileLifting Frames H8607:Parts Of RailwayOrtramway Locomotives Or RollingStock. H8411:Turbo-Jets, Turbo-Propellers AndotherGas Turbines Fastest growing import sources, 2000 2006 Rank 7 Country India 2000(Rm) 1765 2006(Rm) 10960

1992 219.6 50.9 54.4 37.5 21.9 38.2 232.0 72.6 2001 63.4 58.8 181.3 240.6 103.7 1321.0

1996 1824.0 391.8 328.2 213.9 121.0 191.5 1154.8 347.0 2006 470.4 339.5 976.4 1206.8 506.8 6322.9

Growth(%) 52.71 50.43 43.28 41.66 40.81 38.01 37.86 36.74 Growth(%) 49.31 42.00 40.04 38.06 37.34 36.77

Growth(%) 35.58

It is evident that Asia is becoming an important source for imports for South Africa. China again accounts for a large proportion of the volume of trade within the top 20

import destinations for South Africa, but if one also includes India, Singapore, Thailand and South Korea, the importance of this region for South African trade becomes most apparent.

South Africas liberalisation of tariffs is likely to have contributed to an increase in import penetration Import tariffs and import penetration(in constantprices) for South Africa, 1996 2004 Weight ed tariff 1996 Weight ed tariff 2004 % point chan ge in tariff 1996 -04 2.9% 0.6% Effectiv e rate of protecti on 2004 11.1% Import penetrat ion 1995-99 Ra nk Import penetrat ion 2000-04 Ra nk % point change in import penetrat ion -11.5%

Electro nic machin e Machin ery

8.2%

5.3%

37.2%

25.7%

11

2.4%

1.8%

0.1%

69.0%

62.3%

-6.8%

sectors with the highest reduction in tariffs still have high rates of effective protection meaning that their relatively high nominal protection on output is not eroded much by tariffs on intermediate inputs. Low (less than the nominal rate and less than 10%) or negative effective protection characterizes machinery. And continue to enjoy high rates of effective protection.

Description Machinery and Appliances Transport Equipments Total SA rand ASIA

Export(Rm) 2010 47.711 50.492 2011 57323 58416

Imports(Rm)

Trade Balance(Rm)

2010 2011 148.708 176.755 (119.431) 60.045 78.829 (20.414)

590.036 707.511 585.230 722.637 (15.125) 197.251 250.625 259.880 327.052

South African Trade Statistics for December 2011 The trade surplus for December 2011 is R4.7 billion (Surplus of 10.3 billion in December 2010) compared to a deficit of R8.0 billion in November 2011, a month-on-month improvement of R12.7 billion. Exports decreased by R5.5 billion (-8.0%) to R63.0 billion and imports decreased by R18.2 billion (-23.8%) to R58.3 billion. The trade surplus of R4.7 billion in December 2011 was mainly due to a decrease in imports of products of chemical or allied industries, original equipment components, mineral products and machinery and electrical appliances. The cumulative deficit for 2011 is R15.1 billion compared to a cumulative surplus of R4.8 billion in 2010. The November to December change (down by -8.0%) in exports of goods reflected changes mainly in:
o

Machinery and electrical appliances decreased by R 678 million (-12%);

The November to December change (down by -23.8 %) in imports of goods reflected changes mainly in:
o

Machinery and electrical appliances decreased by R4 818 million (-25%).

Asia The deficit decreased from R 11.4bn in November to R 4.3bn in December 2011. Exports decreased by R 1.7bn to R 22.3bn and imports decreased by R 8.8bn to R 26.6bn.

IN INDIAN SCENARIO: Indian Machine Tool Industry The Indian machine tool industry is a widely dispersed industry comprising units of various sizes. The industry has an estimated 750-800 companies in all, producing machine tools, parts, accessories and sub-systems. Of these, around 400 produce complete machine tools of all types and sizes. Between 25 and 50 are large industries and the rest are SMEs. Machine tool industry in India is concentrated primarily in Bangalore, Karnataka; Pune in Maharashtra; Batala and Ludhiana in Punjab; Ahmedabad, Baroda, Rajkot and Surendranagar in Gujarat; Coimbatore and Chennai in Tamil Nadu. The Indian machine tool industry manufactures almost the complete range of metalcutting and metal-forming machine tools and special purpose machines. The products comprise conventional machine tools as well as Computer Numerically Controlled (CNC) machines and include special purpose machines, robotics, handling systems, and Total Productivity Management (TPM) friendly machines. Some of the significant constraints for this sector are shortage of working capital finance, competition faced from imports and lack of skilled manpower. Apart from this, prices of raw material, deficiency of power and labor related issues are other important constraints cited by the industry. At present, the machine tools industry is operating at a capacity of 90% and above. Sector showing strong growth of over 10%. Growth of Industry Product Groups (at two-digit level) Index of Industrial Production (base 1993-94=100) Manufacturing weight 08-09 09-10 AprilApril-

Machinery and 95.7 Equipments Total 793.6

9 3.3

20.6 11

Dec 08-09 15.7 8.9

Dec 09-10 12.7 9.1

Sector-wise FDI Inflows into industry and infrastructure 91-02 Machinery and Equipment Transport Equipments Total 3092.4 431.1 02-07 6854.4 1130.8 07-08 2645.7 674.8 08-09 2528.1 1151.7 09-10 2515.3 1176.6 10-11 (AprilNov 1317.1 533.0

14926.0 16047.6 10748.5 13080.5 11493.0 7831.2

With a wide production capacity base, India is perhaps the only developing country, which is totally self-reliant in such highly sophisticated equipment. only 75% of them exported their products to either other customers, or to their own parent company. Countries like South Africa are investing in mining so there is huge demand for mining machineries. India can emerge as a lower cost sourcing hub for equipment.

Import of new as well as second hand machines is leading to an unhealthy price competition and creating pressure on margins considering the increasing steel prices. (Legal Aspect for import) The following recommendations therefore require consideration: 1. Import of second-hand machinery more than 7 years old should be allowed only at a duty which is equivalent to its bound rate. 2. The port of entry for imports of second hand machinery should be restricted to one or two for effective monitoring to avoid dumping of obsolete technology. 3. Manufacturers of Capital Goods should be allowed to import second-hand machinery upto 10 years old without export obligation.

4. The importer should be required to furnish a clearance certificate from a Government recognized certification agency of the country of origin. Customs clearance should be dependent on obtaining such clearance certificate from the nominated agencies. 5. In the case of construction machinery, the equipment imported should be compliant with the standards set by the Society of Automotive Engineers (SAE), American Society of Mechanical Engineers (ASME), American Society of Automotive Engineers (ASAE) and Organization of Safety and Hazard (OSHA). 6. Such equipment, after customs clearance, should meet the CMVR stipulations on homologation, including emission norms for which clearance should be obtained from ARAI, or its equivalent, as may be specified. The importer should thereafter furnish the equipment for testing and clearance. 7. Customs duty for imports from all countries should be uniform. 8. Excise Duty on Earthmoving and Construction Equipment has progressively gone up from 8 to 16% in the last decade. Excise Duty on this equipment is not eligible for CENVAT set-off. In order to reduce the cost of infrastructure projects, Excise Duty should be reduced from 16% to 8%. 9. To ensure a level playing field, GOI should eliminate 0% customs duty or should impose 4% countervailing duty under Section 3(3) of the Customs Act on all capital goods and project imports attracting Nil customs duty to counter balance internal taxes such as CST on indigenous capital goods. 10. CONCESSIONAL IMPORT DUTY OF ZERO PERCENT ON INPUT MATERIALS: Capital Goods Sector (Machine Tool Industry): CNC System, Servo Drives/Motors, Precision Spindles, LM guide ways, Ball Screws, Precision Bearings, Precision Gauging and Balancing System. EXPORTS FOR CONSTRUCTION AND MINING EQUIPMENT Commodity: 8429 SLF-PRPLD BULLDOZERS, ANGLE DOZERS, GRADERS LEVLRS,SCRPRS,MCHNCL SHOVLS,EXCVTRS,SHOVL LOADERS,TAMPING MACHINES & ROAD ROLLERS Unit. Countries South Africa Values in rs. lacs 03-04 04-05 % growth 370.68 196.89 -46.88

India Machinery Industry is the core around which all the industrial manufacturing takes place in the country. The machinery industry in India has amply demonstrated its potential in meeting the enormous demand of good both in the domestic as well as the international market. The machinery industry in India forms the backbone of the manufacturing sector by supplying all the necessary equipments and machinery required for production. Machinery of various types is required for production. Depending on the field in which they are used, machinery can be large scale, medium scale or small scaled. India is one of the leading exporters of machines required for the steel industry, mining equipments for the mining industry, and equipments for the fertilizer industry, cement industry, petrochemical manufacturing industry and heavy engineering equipments. Agriculture machinery industry: The agriculture machinery industry in India has helped immensely in increasing the productivity of land and labor. Some of the machinery used in the agriculture industry consists of soil working equipment, tractors, power tillers and engines, processing machinery, crop protection machinery, irrigation & drainage equipment machinery, milling equipment etc. There are government schemes that provide loans to farmers to buy agriculture machinery to increase their yield. The tractor industry in India is one of the major components of the agriculture machinery industry. More than 10 companies manufacture tractor vital agriculture machinery in India. Sugar Machinery:
Figure in US$ Million 2007-2008 Import Export 420.51 453.54 2008-2009 505.64 988.59 2009-2010 265.23 669.08

Rubber Machinery: The range of equipments manufactured in the country includes inter-mixer, tyre curing presses, tube splicers, bladder curing presses,tyre moulds, tyre building machines, turnet servicer, bias cutters, rubber injection moulding machine, bead wires etc.
Figure in US$ Million

2007-2008 Import Export 5.21 16.83

2008-2009 12.95 20.77

2009-2010 32.41 6.79

Dairy Machinery: Dairy Machinery equipments such as evaporators, milk refrigerators and storage tanks, milk and cream deodorizers, centrifuges, clarifiers, agitators, homogenisers, spray dryers and heat exchangers.
Figure in US$ Million 2007-2008 Import Export 15.58 4.96 2008-2009 22.99 4.71 2009-2010 1.34 3.83

Textile machinery industry: The textile machinery industry in India is the second largest in the world. Manufacturers are increasingly making use of sophisticated textile machinery to produce the best goods and meet the increasing demand of the global market. Used textile machinery also has a pretty good market share. In fact some studies have suggested that the share for used textile machinery is about 20% of the total market for textile machinery. The huge demands in Indian textile goods abroad have ensured that the use of textile machinery has increased considerably. The Indian textile machinery industry is a significant component of the capital goods industry. This industry comprises of over 1446 machinery and components manufacturing units with over 600 units producing complete machinery, and the remaining parts and accessories. The range includes textile machinery required for sorting, cording, processing of yarns/ fabrics and weaving. Textile Machinery:
Figure in US$ Million

Year 2007-2008 2008-2009 2009-2010

Production 6155 4063 4245

Exports 640 607 525

Imports 5255 4411 4500

Construction machinery industry: The construction sector is another sector that makes use of machinery on a very large scale to meet their industry demands. The government is undertaking several developmental activities and as a result embarking on huge construction projects. More than $35 billion is earmarked for road and highway construction projects of which 20% is for construction machinery. The real estate and housing sector also demands huge investments for construction machinery to meet their targets. It is anticipated that through 2020 about $10billion of construction machinery will be required in the country. Major producers in India Machinery Industry include JCB India, Ashok Leyland, Voltas, Metso Minerals, Telco Construction Equipment, Bharat Earthmovers, Atlas Copco (India), B G Shirke Construction Equipment, Terex Vectra Equipment Salgaocar Engineers, Punjab Tractors, Volvo Construction Equipment India, Larsen & Toubro, Ingersoll Rand India, Caterpillar India, Escorts Construction Equipment etc.

Gujarat: Agro Based and Food Processing Industry, Chemical and Allied Industry, Information Technology, Mineral Based and Allied Industries, Plastic and Allied Industries, Port Related activities and infrastructure and Textile Industry.

Heavy Electrical Industry Turbines and Generator Sets:

Figures in US$ Million Product 2007-08 2008-09 2009-10

Turbines(steam hydro)

721.67

860.10 364.74

1,113.44 434.20

Electric Generators 302.39

Boilers
Figures in US$ Million Product Boiler 2007-08 1,688.48 2008-09 2,082.86 2009-10 2,618.22

Transformers
Figures in US$ Million Product Transformer 2007-2008 15.03 2008-09 14.74 2009-10 17.48

Switchgear and Control Gear

Product 2007-08 (Nos.) and 18938508 2008-09 (Nos.) 17805938 2009-10

Switchgear Controlgear

18119497

Material Handling Equipment The range of equipments manufactured includes crushing and screening plants, coal/ore/ash handling plant and associated equipment such as stackers, reclaimers, ship loaders/ unloaders, wagon tipplers, feeders etc.
Figure in US$ Million 2007-2008 Import Export 236.29 40.49 2008-2009 365.27 28.81 2009-2010 394.54 27.15

Oil Field Equipment covers mainly the onshore drilling equipment.

Figure in US$ Million 2007-2008 Import Export 846.55 37.84 2008-2009 223.17 109.17 2009-2010 274.15 84.08

Metallurgical Machinery Metallurgical machinery includes equipment for mineral beneficiation, ore dressing, size reduction, steel plant equipments, foundry equipments and furnaces.

Figure in US$ Million 2007-2008 Import 403.94 2008-2009 785.36 2009-2010 665.03

Export

121.15

201.55

90.29

Mining Machinery The major mining equipments are Longwall Mining Equipments, Road Header, side discharges Loader (SDL), Haulage Winder, Ventilation Fan, Load Haul dumper (LHD), Coal Cutter, Conveyors, Battery Locos, Pumps, Friction Prop, etc.
Figure in US$ Million 2007-2008 Import Export 22.61 1.35 2008-2009 32.30 0.67 2009-2010 76.27 3.07

The industry group electrical machinery & apparatus has shown a negative growth of 48.8 per cent followed by 7.4 per cent in furniture; manufacturing and 6.4 per cent in machinery and equipment. some important items of the consumer goods are also showing negative growth; cement machinery [(-)76.6 per cent], colour TV picture tubes [(-) 71.7 per cent] , X-ray equipments [(-) 40.3 per cent], plastic machinery including moulding machinery [(-) 34.9 per cent] Some of the important items of capital goods showing high negative growth during the current month and thus contributing to the low growth of the overall index for the month include cement machinery [(-) 70.4 per cent], sugar machinery [(-) 63.8 per cent], some important items of the capital goods are also showing significant growth.These are: conductor, aluminium (45.0 per cent), earth moving machinery (44.9 per cent), x-ray equipment (35.0 per cent) and tractors (30.4 per cent) EXPORT: The rise in the share of manufactured goods essentially emanated from improvement in the share of engineering goods. Reflecting the robust demand in the new markets like Latin America and Africa, exports of engineering goods

Within engineering, exports of all major categories, viz., transport equipment, machinery and instruments, manufactures of metals, iron & steel and electronic goods have recorded higher growth. Indias exports improved as compared to April-June 2010.It reflects the impact of governments policy focus on diversification of Indian exports to other markets, especially those located in Latin America, Africa, parts of Asia and Oceania.

Direction of Indias Foreign Trade Exports (US$ million) 09-10 2,159.8 337.1 38398.5 APRIL-JUNE 10-11 3,978.2 1490.6 54129.6 11-12 6136.2 1339.0 82034.6

.Africa South Africa Total Exports

Direction of Indias Foreign Trade Imports (US$ million) 09-10 2899.0 1383.1 62432.1 APRIL-JUNE 10-11 3447.9 1710.2 90070.7 11-12 4338.3 2207.4 117105.7

.Africa South Africa Total Exports

India's Exports of Principal Commodities (US$ million) 09-10 and 2115.5 3571.4 38398.5 APRIL-JUNE 10-11 2448.8 5608.8 54129.6 11-12 4035.5 9546.8 82034.6

Machinery Instruments Transport Equipments Total Exports

India's Imports of Principal Commodities (US$ million) APRIL-JUNE

09-10 Machine Tools 410.8 Machinery except 4934.7 Electrical and Electronics Electrical 721.8 machinery except electronics Transport 2467.4 Equipments Total Exports 62432.1

10-11 462.5 5611.2 885.2 2647.3 90070.7

11-12 739.6 7486.9 1177.0 2285.2 117105.7

ANALYSIS: Machine Tools Exports from India: Machine tools exports from India has reached Rs.905 million during 2010-11 compared to Rs.810 million during 2009-10 registering a annual growth rate of 12 percent. All types of machines CNC, non CNC, metal cutting and metal forming were exported from India to various countries. Exports of Metal Cutting Machines: Metal cutting machine exports from India has reached Rs.843 million during 2010-11 compared to Rs.560 million during 2009-10 registering a Y-O-Y growth rate of 50 percent. Exports of Metal Forming Machines Production of metal forming machines has reached Rs. 3084 million during 201011compared to Rs. 2643 million during 2009-10 registering a growth rate of 17. Metal forming machine exports from India has declined to Rs.62 million during 2010-11 compared to Rs.249 million during 2009-10 registering a Y-O-Y decline of 75 percent. Machine Tools Imports to India: Machine tools imports to India has reached Rs.67032 million during 2010-11 compared to Rs.48422 million during 2009-10 registering a annual growth rate of 38 percent. All types of machines CNC, non CNC, metal cutting, metal forming, used and new machines are imported to India from various countries. Imports of Metal Cutting Machines

Metal cutting machine imports to India has reached Rs.47571 million during 2010-11 compared to Rs.28539 million during 2009-10 registering a Y-O-Y growth rate of 67 percent. Imports of metal Forming Machines Metal forming machine imports to India has declined marginally to Rs.19462 million during 2010-11 compared to Rs.19884 million during 2009-10 registering a Y-O-Y decline of 2 percent. Machine Tool Consumption in India: Machine tool consumption (Production - Export + Import) has reached Rs.90,285 million during 2010-11 compared to Rs.64,174 million during 2009-10 registering a Y-O-Y growth rate of 41 percent. All types of machines CNC, non CNC, metal cutting, metal forming, are consumed in India. Detail machine wise consumption trends can be obtained from our website through members login area or contact us for CD format. World Machine Tool Scenario in 2010 2010 was equally a year of delight for the other Asian performers - Korea, Taiwan and India. All three countries grew at over 65 % and secured leading positions of fifth, sixth and thirteenth, respectively in the overall production ranking.