Gujarat plastic bag makers fear 30-40% business loss

With its neighbouring state Rajasthan imposing a ban on plastic carry bags from August 1, plastic carry bag manufacturing units in Gujarat feel the thickness bar for carry bags will be raised from the current 20 microns in Gujarat as well. If raised, the move is likely to result in 30-40 percent loss in business for plastic carry bag manufacturers in Gujarat.

“Since a 40-50 micron bag costs more than a 20 micron thick plastic bag, demand is always higher for the latter from medicine shops and small retailers,” said a small scale plastic manufacturing unit owner.

However, industry players feel that if the Gujarat government goes for a 40 micron cap, the demand would go down by around 30-40 per cent. The manufacturing units are now counting days when the new plastic rules of 2009 promulgated by the environment ministry would become effective in Gujarat.

Last year, Gujarat government announced a ban on plastic in 10 temple towns of the state. The Union ministry of environment and forests had issued a draft notification on September 17, 2009 to ban plastic bags below 40 micron thickness which several states followed suit. Some of the states which increased the minimum thickness of plastic carry bags to even higher limits of 40, 50, or 70 microns, include Goa (40 micron), Himachal Pradesh ( 70 micron), Maharashtra (50 micron), Meghalaya ( 40 micron), Punjab (30 micron), Chandigarh (30 micron), West Bengal (40 micron ), Kerala (30 micron).

Currently, Gujarat has around 300 small and medium plastic bag manufacturing units with a total industry size pegged at close to Rs 300 crore, informed a Gujarat State Plastic Manufacturers’ Association (GSPMA) official.

Jigish Doshi, ex-chairman of the GSPMA said, “If the thickness bar is raised, the demand for polymer will also rise commensurately, and therefore, the overall impact on the plastic processing industry would be positive. However,the immediate impact on the SMEs would be that of loss of business and, in turn, loss of employment.”

Shailesh Patel, president of GSPMA also admitted that while a 20 micron bag costs around 75 paise, a 40-50 micron thickness bag would cost anywhere around Rs 4-5 as material costs would more than double, and this would result in a dip in demand. Moreover, a kilogram of polymer of the grade that is used in plastic carry bags now costs around Rs 80.

At the same time, industry insiders claimed that there is a short-term opportunity as Rajasthan is declared a plastic-free zone. In spite of the ban,the demand for plastic carry bags is unlikely to dip anytime soon, allowing Gujarat based manufacturers to supply to the neighbouring state through porous borders.

Another neighbouring state Maharashtra has a cap of 50 micron thickness for plastic carry bags, and several units from Gujarat, Daman and Silvassa have been supplying bags to cater to the demand there. Owner of a plastic carry bag manufacturing unit here said on grounds of anonymity that several small units set up temporary factories in Maharashtra with an investment of Rs 3-8 lakh to feed the market there. “A similar story could now repeat in Rajasthan,” he added.

Rajasthan is estimated to have a demand for plastic carry bags worth Rs 300-400 crore.