Saturday, September 21, 2013

Indian Plastics Industry’s SOS for survival

Indian Plastics Industry’s SOS for survival

Future of over 50,000 manufacturing units and 40 lakh jobs in jeopardy due to slowdown in economy and recent upheavals in currency market

·        Enhance sanctioned working capital of SMEs by 30%
·        Increase import duty on plastic finished goods to 20%
·        Roll back import duty on polymers to 5%
·        Anti-dumping duty on PVC resin should go
·        Vat on plastic products be brought down to 4% across the country
·        Excise duty be rationalized at 8%
·         Plastic  is a product for common 

From L - R Mr. Haren Bheda (Joint Secretary AIPMA), Mr. Arvind Mehta (Chairman AIPMA) & Mr. Hiten Bhedia (Secretary AIPMA)

Mumbai September 17, 2013:  “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 & Fertilizers, 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 Mr. 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.”

Arvind 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 The Memorandum further recommends abolition of anti-dumping duty  on imported PVC materials & other plastics granules from other countries. It further 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.

About The All India Plastics Manufacturers’ Association
The All India Plastics Manufacturers’ Association (AIPMA) is a 65-year old body with 25 member associations from across India affiliated to it. AIPMA is dedicated to the development and growth of plastic industry and contribute to India's growth. AIPMA is based at Mumbai and has Regional Offices at Delhi, Chennai  and Kolkata. With more than 2500 direct members and 22000 members through Affiliated Associations from more than 175 cities across India, representing various segments of the industry such as polymer manufacturers, machinery manufacturers, processors, moulds & dies makers, traders, exporters, manufacturers, processors, moulds & consultants, institutions and many more.  90% of Membership of AIPMA  is from MSME Sector. Since 1992, AIPMA is partnering and is Sole Selling Principal Agents in India for  premier Plastics Exhibitions like  Arabplast, Dubai, Plastpack Africa, South Africa, NPE US,  etc AIPMA also organises Trade delegations to K  exhibition - Germany,  Koplas - Korea, NPE, USA, Taipeiplast - Taiwan,  Asiamold - China, Chinaplas, China and  many more. In India, AIPMA helps it members through organising trade fairs like Plastivision India.

11th September, 2013

 The Hon’ble Finance Minister
Ministry of Finance
North Block,
New Delhi-110001
Tel. +91 11 23092510, +91 11 23092810
Fax. +91 11 23092830  

  Kind Attn: Hon’ble Shri. Chidambaramji,
  Dear Sir,

We the All India Plastic Manufacturers Association (AIPMA), representing plastic processing sector comprising of over  50,000 units, 90% of which are in SME segment, employing over 4 million workers, would like to bring to your urgent attention difficulties faced by the processing sector 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.
You will appreciate the fact that today plastic as a material are vital to all manufacturing sectors and as such the woes of the processing sector would undisputedly affect the very survival of 50000 odd processing units largely in SME segment.
Following are the reasons affecting viability of their existence
 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 plus) to the tune of 30%, the small and medium enterprises in the processing sector are facing  acute shortage of working capital to manage the cash flows.  As the SME’s are mostly financed by Banks, we kindly request you to enhance the sanctioned working capital of SME’s by 30% on adhoc basis to enable them to tie over the financial crunch and continue the operation.  This would be a crucial step towards ensuring timely helpwithout which many units will face closure resulting into NPA’s and unemployment.

Sir, the woes of the industry are aggravated by free and unfair flow of finished products under various FTA’s signed by India.  Under FTA’s finished products attract preferential import duties which are declining over the period.   As a matter of fact, India is fast becoming a hub of imported plastic products entering at negligible import duty into Indiaand depriving the Indian manufacturer fair play. We strongly demand that the import duty on all imported plastic products should be increased to a minimum of 20%.  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 drain on the economy.

In recent past the import duty on the imported raw materials was hiked to 7.5% from prevailing 5% contrary to AIPMA’s continuous stand on the issue.  Since the situation has changed with depreciating Rupee against US Dollar, Euro and British Pound,  it would be appropriate to at least restore the original duty rate of 5% with immediate effect.  This would ensure free availability and affordable rates of raw materials for local processors.

India imports 60% of its requirement of PVC and  its capacity enhancement is unlikely in the near future in India.  The anti-dumping duty is redundant under the current scenario and must be abolished immediately.

Plastic products attract vat of up to 12.5% at present. Being an item of necessity for common man, it would be prudent to revise the same to 4% across the country as it is a common man’s product.

Excise duty on Polymer products should be revised toits original 8% to boost the growth of the processing segment.

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 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 investments.  This will be in line with proposed building up of manufacturing capabilities for the country.

Sir, we trust that the points raised by the plastic processing industry will be addressed on war footing.

Best Regards,

Yours faithfully,
For The All India Plastics Manufacturers’ Association

Dr. Asutosh Gor                                                   


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