Plastic goods manufacturers urge PM Narendra Modi to constitute a Petrochem regulator

The plastic manufacturers and processors have urged Prime Minister Narendra Modi to constitute the Petrochemical Regulatory Authority to create a fair pricing mechanism and ensure that PSUs like IOCL, GAIL, BPCL support domestic plastic processing units. The Indian Plastic Federation (IPF), the apex body of plastic processors, have urged the PM in the wake of undue profiteering the petrochemical industry was making leaving the Indian plastic processors in a lurch.

The government’s anti-dumping duty and mandatory BIS standards were creating a non-tariff barrier and the Indian plastic processing industry being import-dependent has to face a huge problem. The IPF has demanded an immediate ban on the export of the raw material, polymer, from India to ease supplies in the country and check the price rise imposing zero duty on polymer imports.

The Indian plastics industry, mainly competing with China, constitutes of more than 50,000 plastics processing units of which 90% are MSME. The sector directly employs more than 50 lakh people and contributes more than `3 lakh crore to the country’s GDP.

Prices of the raw materials like PVC, ABS, polypropylene, PC, PET have increased ranging between 30% and 140% over the last five months. “The petrochemical companies are taking advantage of the surge in polymer prices by restricting the supplies to domestic processing units and releasing the material after the price increase in regular intervals. The PSUs have also joined hands with private players thereby commanding unjustified polymer prices in the domestic market as compared to international prices,” said Sisir Jalan, secretary, IPF.

Polymer prices are 10-15% lower in the international market and Indian petrochem producers do not enter into forwarding contracts as overseas producers do.

Jalan alleged that domestic producers demand anti-dumping proceedings on select grades of polymers in which they charge a premium. Indian raw material manufacturers export in large quantities and create scarcity resulting in an exponential rise in price in the last five months. This is coupled with a severe drop in demand due to the pandemic, which has down the line effected in a working capital crunch.

The growing imports of finished plastic goods from China are also making the Indian plastic industry uncompetitive in the domestic market and higher raw material prices are making exports of finished plastic goods uncompetitive. “Unless polymer prices in India are brought at par with the international prices, survival of thousands of plastic processing units in India are at stake, IPF’s joint secretary,” Amit Agarwal said.