Laminate industry approaches NITI Aayog, DPIIT for inclusion in PLI scheme

The Rs 8,000-crore laminate industry has approached the NITI Aayog and the Department for Promotion of Industry and Internal Trade (DPIIT) for its inclusion in the the Production Linked Incentive (PLI) scheme.  

In a representation to the government think tank and the DPIIT, laminate manufacturers said they are one sector where India is at the forefront, but pressures from countries such as China present the need to maintain aggressive export pricing without compromising much on margins.

The representation made by the Indian Laminate Manufacturers' Association (ILMA) said the PLI Scheme has announced practical but attractive benefits for the manufacturing sector with a clear intention to boost industrial development.

Providing benefits to the laminate sector will not only cement its position in the world market, but also expand its horizon to newer shores, said Rashmi Deshpande (partner at Khaitan & Co), who assisted ILMA in its representation.  

"Besides, this additional incentive is likely to give impetus to further R&D in the sector," Deshpande said.  

Until recently, the sector benefited from general export promotion schemes such as the Merchandise Exports from India Scheme (MEIS). However, upon withdrawal of MEIS with effect from January 1, 2021, the sector no longer enjoys any benefit. The recently announced Remission of Duties and Taxes on Export Products (RoDTEP) scheme does not sufficiently incentivise investment-led incremental production and capacity building, the association said in its representation.

India is one of the top five laminate exporters in the world. In fact, laminate manufacturing is one of the few sectors where Indian players have the potential to move ahead of their Chinese counterparts. A PLI boost will go a long way in ensuring its continuous rise, it said.

The combined sector revenue stood at Rs 8,000 crore, 25 per cent of which accrued from exports to over 100 countries, during 2020-21.

The global furniture market, for which laminate is a major raw material, is valued in the range of $580-620 billion, 35-40 per cent of which is catered to by global retail trade. China, Vietnam, and Malaysia are the three major Asian exporters of furniture products.

As leading multinationals explore options to shift their operations outside China, India is aiming to achieve a sizable share of global furniture manufacturing and export over the next 4-5 years.

“Given its current strength, if backed by the PLI Scheme, the laminate industry is confident to become the world's manufacturing hub and gain market share globally” said Saurabh Mittal, managing director & CEO of Greenlam Industries Limited and founding member of ILMA.

According to industry analysts, the laminate sector faces stiff competition from emerging countries such as Thailand, Malaysia, Indonesia and Vietnam. China, which is already an established competitor, has easy access to new and emerging Asian markets owing to the ASEAN-China Free Trade Agreement, which has the effect of making available Chinese goods into these markets duty-free.

This acts as a major hindrance for Indian-manufactured products, which attract import duties in the range of 10-25% in these markets. India faces a similar problem owing to China’s favorable trade terms with countries in Latin America. This, coupled with removal of India’s status by the USA from its Generalized System of Preferences (GSP) programme has put further pressure on the country’s exporters.

Moreover, Indian imports attract a higher duty rate in North America vis-à-vis imports from the European Union which is yet another region having a sizable laminate manufacturing industry, the association said.

The government has already announced a PLI scheme for 13 sectors, including electronic products,  medical devices, pharmaceuticals drugs, telecom and networking products, food products, ACs, LED, automobiles & auto components, textile products and speciality steel.