Woes dampen growth of plastic industry
Updated: Sep 18, 2013 03:10:53pm
New Delhi, Sept 18 (KNN) Although plastic as a material is vital to all manufacturing sectors, the industry is besieged with woes such as high input costs and import duty that threaten the very existence of the processing units, 90 per cent of which belong to the SME segment.
“We would like to bring to your urgent attention the difficulties faced by the processing sector which is driving SME units towards unsustainable operations and stalled growth of the sector because of all time high prices of polymers coupled with other input costs,” said All India Plastic Manufacturers Association (AIPMA) in a release.
AIPMA represents the plastic processing sector comprising of over 50,000 units and employs over four million workers.
Among the main reasons stated by AIPMA is the acute shortage of working capital.
“As the polymer raw material prices have seen unprecedented rise in the recent months, (the prevailing average price of commonly used plastics is around Rs 110/kg) to the tune of 30 per cent, the small and medium enterprises in the processing sector are facing acute shortage of working capital to manage their cash flow,” AIPMA said.
As SMEs are mostly financed by banks, AIPMA requests the government to enhance the sanctioned working capital of SMEs by 30 per cent on ad hoc basis to enable them to tie over the financial crunch and continue the operation. It would be a crucial step towards ensuring timely help without which many units would face closure resulting in NPA’s and unemployment.
The industry body also seeks a 20 per cent increase in import duty of plastic finished goods. Owing to the various FTA’s signed by India, there is free and unfair flow of finished plastic goods. Further, under FTA’s, finished products attract preferential import duties.
“India is fast becoming a hub of imported plastic products entering at negligible import duty into India and depriving the Indian manufacturer fair play. We strongly demand that the import duty on all imported plastic products be increased to a minimum of 20 per cent. This would go a long way in bringing fresh investments in the field for future growth to meet internal demand and circumvent imports of insignificant products that can be a drain on the economy,” it said.
AIPMA also seeks roll back of import duty on polymers. In recent past, import duty on imported raw materials was hiked to 7.5 per cent from the prevailing 5 per cent.
“… with depreciating Rupee against US Dollar, Euro and British Pound, it would be appropriate to at least restore the original duty rate of 5 per cent with immediate effect. This would ensure free availability and affordable rates of raw materials for local processors,” the Association said.
Currently India imports 60 per cent of its requirement of PVC and its capacity enhancement is unlikely in the near future. “The anti-dumping duty is redundant under the current scenario and must be abolished immediately,” it said.
Another cause for concern is the vat on plastic products. Plastic products attract vat of up to 12.5 per cent at present. Considering that plastic is an item of necessity for common man, AIPMA thinks it would be prudent to revise the same to 4 per cent across the country.
Also, to enhance growth of the processing segment, excise duty according to the industry body should be revised to its original 8 per cent.
Plastics today form a substantial portion of the purchase basket of common man in terms of packaging and items of necessities. Import dependence for such a critical requirement of the country can only lead to supply/demand gap, out flow of valuable foreign exchange not to mention lost opportunity to generate employment across the value chain.
“For 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 investments. This will be in line with proposed building up of manufacturing capabilities for the country,” AIPMA said. (KNN)
“We would like to bring to your urgent attention the difficulties faced by the processing sector which is driving SME units towards unsustainable operations and stalled growth of the sector because of all time high prices of polymers coupled with other input costs,” said All India Plastic Manufacturers Association (AIPMA) in a release.
AIPMA represents the plastic processing sector comprising of over 50,000 units and employs over four million workers.
Among the main reasons stated by AIPMA is the acute shortage of working capital.
“As the polymer raw material prices have seen unprecedented rise in the recent months, (the prevailing average price of commonly used plastics is around Rs 110/kg) to the tune of 30 per cent, the small and medium enterprises in the processing sector are facing acute shortage of working capital to manage their cash flow,” AIPMA said.
As SMEs are mostly financed by banks, AIPMA requests the government to enhance the sanctioned working capital of SMEs by 30 per cent on ad hoc basis to enable them to tie over the financial crunch and continue the operation. It would be a crucial step towards ensuring timely help without which many units would face closure resulting in NPA’s and unemployment.
The industry body also seeks a 20 per cent increase in import duty of plastic finished goods. Owing to the various FTA’s signed by India, there is free and unfair flow of finished plastic goods. Further, under FTA’s, finished products attract preferential import duties.
“India is fast becoming a hub of imported plastic products entering at negligible import duty into India and depriving the Indian manufacturer fair play. We strongly demand that the import duty on all imported plastic products be increased to a minimum of 20 per cent. This would go a long way in bringing fresh investments in the field for future growth to meet internal demand and circumvent imports of insignificant products that can be a drain on the economy,” it said.
AIPMA also seeks roll back of import duty on polymers. In recent past, import duty on imported raw materials was hiked to 7.5 per cent from the prevailing 5 per cent.
“… with depreciating Rupee against US Dollar, Euro and British Pound, it would be appropriate to at least restore the original duty rate of 5 per cent with immediate effect. This would ensure free availability and affordable rates of raw materials for local processors,” the Association said.
Currently India imports 60 per cent of its requirement of PVC and its capacity enhancement is unlikely in the near future. “The anti-dumping duty is redundant under the current scenario and must be abolished immediately,” it said.
Another cause for concern is the vat on plastic products. Plastic products attract vat of up to 12.5 per cent at present. Considering that plastic is an item of necessity for common man, AIPMA thinks it would be prudent to revise the same to 4 per cent across the country.
Also, to enhance growth of the processing segment, excise duty according to the industry body should be revised to its original 8 per cent.
Plastics today form a substantial portion of the purchase basket of common man in terms of packaging and items of necessities. Import dependence for such a critical requirement of the country can only lead to supply/demand gap, out flow of valuable foreign exchange not to mention lost opportunity to generate employment across the value chain.
“For 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 investments. This will be in line with proposed building up of manufacturing capabilities for the country,” AIPMA said. (KNN)
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