Will The Import Of Second-hand Machinery Boost Local Production Of Electronic Products?

The Ministry of Environment, Forests and Climate Change has allowed the import of second-hand machines, with a residual service life of at least five years, for use in electrical and electronics manufacturing units. While some industry veterans feel this is a positive move, others have a different viewpoint.

- Baishakhi Dutta

The Ministry of Environment, Forests and Climate Change (MoEF&CC) has stated in its latest notice that second-hand plant machinery with a residual life of at least five years, which can be used for manufacturing electronic and electrical products, will not require explicit permission from the committee monitoring the import of hazardous and other waste.

This gives some breathing space for electronics manufacturing services (EMS) companies, as it makes the investments in their production line more affordable. Surface mount technology (SMT) machines are the biggest investments when starting an EMS unit. Hence, many firms consider investing in good-condition second-hand SMT machines a viable alternative to the costlier new ones.

Spurring domestic manufacturing

At present, depending on the scale of the business and the production targets, the cost of an SMT machine ranges between US$ 50,000 and US$ 300,000. For a startup, this is a massive amount to invest. With the uncertainty of the returns on investment, a lot of thought has to be given to such high expenditure. In comparison, second-hand SMT machines are available at just 30-40 per cent of the price of new machines.

Another option is to buy reserviced machines. In this case, used machines are taken back by the vendor and stripped down, all the worn out parts are replaced, and the machine is re-assembled. But this process is generally more expensive than purchasing used SMT machines.

Suresh Nair, director, Leaptech Corporation, believes that the main reason customers look for used machines is to keep the capital investments low. Also, some companies look for machines for a small, short term project, which may run for only a few months.