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High prices and weak Rupee hit India’s plastics industry

By: Satnam Singh

September 18, 2013

MUMBAI — Rising raw material prices and the crash of the Rupee has badly mauled the Indian plastic industry, according to the country’s largest plastics trade association.

“[The] future of over 50,000 manufacturing units and 4 million jobs are at stake,” said Arvind Mehta, chairman of the All India Plastics Manufacturers Association in Mumbai.

The association has called on the government for urgent steps to rescue the plastics industry.

“Polymer prices have gone up sharply,” Mehta said. “Our finances have gone haywire, the processors are clueless with how to arrange working capital to run their units.”

Lenders want to charge rates as high as 18 percent. The association is calling for a level playing field with China, where it said lending rates are as low as 7 percent.

He added that polymer prices have risen by 25-30 percent in the last quarter.

The trade group has asked the government to increase the import duty on plastic finished goods to 20 percent in order to encourage domestic plastic industry.

“India signed free trade agreements with countries like Malaysia, Singapore, and Thailand, and [the] import of finished plastic goods [are] hurting the domestic industry, which is already in trouble,” Mehta said.

AIPMA President Ashtosh Gor also called for duties on plastic products from China.

“To safeguard the growth of plastics processing sector, anti-dumping or safeguard duty structure should be imposed on import of cheap plastic finished goods from China or other neighboring countries which are heavily under invoiced,” Gor said.

Officials said the automotive plastics sector, in particular, is at risk.

While the per capita consumption of plastics in India is still low compared to more developed countries, at around 8 kilograms per year, the plastic industry had been growing twice as fast as overall GDP in the last four years.

Mehta said about 90 percent of the industry is comprised of small- and medium-sized enterprises. India exported around $4.6 billion in plastic finished goods in 2012.

“Exports could be increased, but [the] government has to restore order and control volatile market conditions,” he said.