Plastics industry sends SOS for survival

July 16, 2014 5:22 pm

“Unless urgent remedial measures are introduced by the government to rescue the industry, the future of over 50,000 manufacturers and jobs of over 40 lakh workers in the plastics industry face the threat of extinction very soon,” lamented Dr. Asutosh Gor, President of The All India Plastics Manufacturers Association (AIPMA) while sharing details of the Memorandum that has been made to Union Finance Minister, Ministries of Commerce, Industry, Ministry of Chemical & Fertilisers, Department of Chemical & Petrochemical, MSME, Anti Dumping, Planning Commission, etc. The Memorandum recommended urgent and specific steps needed to derisk from multiple crisis that the industry is facing due to falling rupee and global slowdown of economic activity. “We are suffering for no fault of ours,” mentioned Arvind Mehta, Chairman, Governing Council – AIPMA. He continued, “We are not asking the government to be protectionist for us. This is an attempt to request for a level-playing field. As an industry, we have grown at over 12% per annum till recently, our contributions to growth in national GDP and employment have been exemplary. All this was achieved in a sector where over 90% of its players are MSMEs. In last one year, we have had negative growth. If we continue like this, there would be no hope for most of us. The situation is alarming and needs urgent attention.” Mr Mehta also highlighted the fact that while plastics industry is amongst the biggest exporters, it needs to import a lot of its raw materials. Dr Gor also feared that the closure of units will not only leave workers jobless, but it will also result in higher NPAs for financial institutions providing much needed funds for SMEs. The Memorandum suggests measures to be taken urgently. These include roll-back of customs duty from 7.5% to 5% on plastic raw materials such as PP, PE, PVC, Polystyrene. It further recommends abolition of anti-dumping duty on imported PVC materials and other plastics granules from other countries. It includes that the customs duty of 20% on imports of finished products from all countries including China and other neighbouring countries should be applicable. The Memorandum also reflects the industry’s need for abolition of entry tax and any other levy, apart from VAT on plastic granules and capital goods used for manufacture of plastic finished products. It also suggests VAT on all plastics finished products of common man’s use at 4% instead of a higher rate of 12.5%. To address non-tariff barriers, FTAs, it is found that countries with whom India has FTA treaty are not performing. “To safeguard the growth of plastics processing sector, anti dumping duty or safeguarding duty structure should be imposed on import of cheap plastic finished products from China and other neighbouring countries which are heavily under invoiced,” says Dr Gor. He suggested special incentive for export of plastics finished products from India to various countries. That will help in growth of this sector as well as help in curtailing current account deficit. “For a long term health of the economy, it is about time that policy decision be made to support the processing sector with incentives to attract technology and capital investment,” he added.