High costs of raw material, labour and power trouble plastics industry
Updated: Sep 11, 2013 12:44:03pm
New Delhi, Sept 11 (KNN) There is cause for alarm in the plastics industry where although the manufacturing cost has gone up owing to increasing costs of raw material, power and labour on account of inflation, the selling price has remained the same.
“Over the last two months the cost of raw materials such as polypropylene, polyethylene and engineering plastics has increased by 25 to 30 per cent and this has caused stress to our working capital and narrowed our profit margins,” said President of All India Plastics Manufacturers Association (AIPMA), Asutosh Gor.
In addition, the number of taxes they have to pay has contributed to a cascading effect. “Ultimately the industry and common man to whom we supply our products have to bear the brunt,” he added.
As much as 90 per cent of AIPMA members belong to the MSME sector and it is those small units that are the most affected, as their return on investments is no longer viable.
“When manufacturing is on its deathbed, how can we expect exports to grow,” Gor asked.
The President of the Association believes that the government should offer incentives such as power subsidy, technology upgradation and increase in duty drawback rate specifically for the sector to take it forward, just as it has done for the textiles sector.
Another cause for concern is the difference between duty on import of raw material and duty on import of finished goods which is a mere 2.5 per cent. As a result, processors who buy raw materials for their manufacturing have to compete with importers of finished goods.
“To make manufacturing viable, rather than importing finished goods, the difference should be 10 per cent,” Gor said.
Further, according to him, owing to the current free trade agreement, foreign companies are dumping their products in India.
The plastics sector which contributes five million jobs a year, according to Gor, comprises of small units which have been affected by inflation, economic slowdown and rupee devaluation.
Plastics are integral to our lives as from the moment we wake up we use them in some form or the other - beginning with a toothbrush. More needs to be done in his opinion to boost the sector. (KNN/ES)
“Over the last two months the cost of raw materials such as polypropylene, polyethylene and engineering plastics has increased by 25 to 30 per cent and this has caused stress to our working capital and narrowed our profit margins,” said President of All India Plastics Manufacturers Association (AIPMA), Asutosh Gor.
In addition, the number of taxes they have to pay has contributed to a cascading effect. “Ultimately the industry and common man to whom we supply our products have to bear the brunt,” he added.
As much as 90 per cent of AIPMA members belong to the MSME sector and it is those small units that are the most affected, as their return on investments is no longer viable.
“When manufacturing is on its deathbed, how can we expect exports to grow,” Gor asked.
The President of the Association believes that the government should offer incentives such as power subsidy, technology upgradation and increase in duty drawback rate specifically for the sector to take it forward, just as it has done for the textiles sector.
Another cause for concern is the difference between duty on import of raw material and duty on import of finished goods which is a mere 2.5 per cent. As a result, processors who buy raw materials for their manufacturing have to compete with importers of finished goods.
“To make manufacturing viable, rather than importing finished goods, the difference should be 10 per cent,” Gor said.
Further, according to him, owing to the current free trade agreement, foreign companies are dumping their products in India.
The plastics sector which contributes five million jobs a year, according to Gor, comprises of small units which have been affected by inflation, economic slowdown and rupee devaluation.
Plastics are integral to our lives as from the moment we wake up we use them in some form or the other - beginning with a toothbrush. More needs to be done in his opinion to boost the sector. (KNN/ES)
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