TUF proposed for plastic processing industry

Levy may be imposed on industry for TUF corpus

The department of chemicals and petrochemicals proposes to set up a technical upgradation fund (TUF) for the plastic industry in line with the textile sector.
 
While it is part of the recommendation of the inter-ministerial committee on boosting exports from the micro, small and medium sector enterprises (MSME) but the modalities are yet to be worked out by the ministry.

The fund will be set up for plastic processing sector in line with the proposed technology upgradation fund for the chemical industry.
 

“The proposal has been accepted “in principle” by the ministry but the industry feedback will be considered before the structure is worked out”, said an official source.

 
According to the recommendation of the inter-ministerial committee, there is an urgent need to increase the export of value added plastic items and increase its share in the total plastic exports. A major constraint as the committee observes in achieving this goa, is the low production volume of plastic processing industry.

Therefore, it was suggested that Technology Upgradation Fund is essential for Plastic Processing Sector. The government recently relaxed the norms for setting up of the plastic parks.

As regards to the funding of the corpus of the fund, one option under consideration is contribution from the industry in the form of levy to be imposed on the plastic sector. “This proposal is similar to that of imposition of a chemical cess on the chemical industry.

The cess collected will be used exclusively for technology upgradation in the plastic processing industry aiming towards greater specialisation.
 
An official source said this proposal was in line with the cess imposed by the ministry of new and renewable energy to set up a clean energy fund or as with the case of the telecom fund of the department of telecommunications; in fact, DoT imposes a 5% cess on an operator’s gross revenue, they added.
 
With the same logic, the chemical cess was proposed earlier. The Union ministry of chemicals is in the process of finalizing to impose a chemical upgradation and innovation cess at the rate of 0.1% ad valorem on chemical industries.

The aim is to collect funds for establishing a Technology Upgradation and Innovation Fund. Now under the revised plan following stiff opposition from the industry, the cess has been brought down from 0.5% advalorem to 0.1% on chemical production per company.

The Indian plastics processing industry is highly fragmented and small and tiny players constitute majority of the units. Injection moulders dominate the Indian plastics processing sector. Polyethylene bag and sheet producers dominate the extrusion segment as per the highlights of the Organisation of Plastics Processors of India.

India ranks 8th in the world in total plastic consumption but per capita consumption of plastic in India is 4kg, against the world average of around 20kg. The consumption of recycled plastic constitutes approx. 30% of the total consumption.