Rising raw material prices by domestic producers threatens over 50k plastic processing units in India

Kolkata, Dec 10 (FN Bureau) In a letter written to Prime Minister Narendra Modi, the plastic manufacturers, processors represented by more than 10 leading associations across the country, on Wednesday demanded the constitution of a regulatory authority to curb the consortium, undue profiteering in the petrochemicals industry which has left the plastic manufacturing/processing industry in the country in a lurch and on the verge of complete collapse.

The industry associations also demanded a stop to imposition of anti-dumping duty, mandatory BIS standards, decrease import duty on raw material and ban/restrict export of raw material from the country to enable the plastic industry in the country to survive and remain competitive with other countries like China. The plastics industry in India constitutes more than 50,000+ plastics processing units of which 90% are MSME’s. The sector directly employs more than 50 lakhs people and contributes more than Rs 3 Lakh crore to the country’s GDP. Indian Plastics Federation with around 900 members, most of them from Eastern India, has been working for the promotion and development of the plastic industry and for the protection and safeguarding the interests of the industry, particularly in the Eastern Region. The association urged the timely intervention of the Governments – both Central and State to save the plastic processing industry which is on the verge of collapse due to the dramatic increase in the prices of raw material by raw material manufacturers in the country. The prices of the raw materials like PVC, ABS, polypropylene, PC, PET have increased multifold ranging between 20 and 140% over the last five months. “The petrochemical companies are taking advantage of the surge in polymer prices by restricting the supplies to domestic processing units and releasing the material after increasing the prices on regular intervals. Unfortunately, PSUs have also joined hands with the private players and are dancing to their tunes and are not serving the processing industries in a fair manner. Rationale of price increases by domestic industries is not justified as compared to international prices.

It is also worth mentioning that the domestic petrochemical producers do not enter into forward contracts like overseas producers do. So price play and manipulation by domestic companies becomes very easy. Domestic producers demand anti-dumping proceedings on select grades of polymers on which they are already charging a premium due to constrained availability. Raw material manufacturers export the raw material in large quantities and create scarcity of the polymer raw materials. This has resulted in an exponential rise in price of raw material by petrochemicals companies in the last 5 months which is threatening the survival of thousands of plastics processing units in India. As a result of the above-mentioned issues, it is further stated that the industry which is already facing severe drop in demand due to the pandemic, is further facing working capital and related financial issues owing to the exponential increase in cost of the raw material. The growing threat of increased imports of plastics intermediate and finished goods from countries like China, would prove to be a disaster to make India ‘Atmnirbhar’. As Indian plastics processing units have become highly uncompetitive in global market due to increase in raw material prices, export from India may take a severe hit. Indian plastic goods exporters are bound to become uncompetitive in the international market as polymer prices are10-15% cheaper in the international market as compared to prices in India.
In the backdrop of the above scenario, the plastic manufacturers and processors have urged the PM to urgently constitute the Petrochemical Regulatory Authority; ensure that the PSUs like IOCL, GAIL, BPCL support the domestic processing units by serving them in a fair manner and create a fair pricing mechanism.

The industry players have also demanded that the government should immediately stop imposing Non-tariff barriers on raw material such as anti-dumping duty and mandatory BIS standards as India is import dependent and consumption of several polymers is much higher than domestic production. They have also demanded an immediate ban on export of raw material from India to ease out the supply in the country and to check the price rise and to reduce the import duty to zero on the raw material wherein India is import dependent.