Plastic industry seeks hike in customs duty to curb cheap imports

Urges review of FTAs as exports plunge 11% in October; wants minimum 10% gap between duty on raw material and on finished goods

Faced with a sharp decline in exports and an erosion in domestic offtake brought on by a spurt in imports, India’s plastic manufacturers have urged the government to increase customs duty, levy anti-dumping duty and review foreign trade agreements (FTAs) to restrict supply of cheap and poor-quality products from overseas markets.

Plastic producers under the aegis of the All-India Plastics Manufacturers Association (AIPMA) met with other players in the value chain to discuss steps needed for the revival of the domestic industry. AIPMA, which represents some 22,000 makers of plastic and allied products, highlighted the need to bring the industry on a growth trajectory to prevent closure of these units and improve exports of plastic products.

“The plastic industry is currently witnessing depression in the market which has led manufacturing units to put their expansion and investment plans on hold. The government needs to come out with a clear strategy on various fronts in order to spur growth,” said Arvind Mehta, Chairman, Governing Council, AIPMA.

In October 2019, India exported plastics worth $693 million, down 10.9 per cent from $778 million in the corresponding month last year. The cumulative value of plastic exports during April–October 2019 stood at $5.02 billion as against $5.37 billion reported in the corresponding period last year.

Jagat Killawala, President, AIPMA, believes the plastic industry is a key contributor to the Indian economy and is expected to play a major role in India becoming a $5-trillion economy.

Elaborating on the demands, Killawala said that taking into account both, the short term and long term growth of plastic processing units, the industry has urged the government not to raise import duty on key raw materials, but certainly on finished products.

The plastics processing industry consists of over 50,000 micro and small units employing about 5 million workers. It is a key contributor to the Indian economy, manufacturing goods worth Rs 3.75 trillion a year.

However, it is under severe strain due to cheap imports from China and other south Asian countries. The industry has demanded that the difference of a minimum 10 per cent be maintained between customs duty of raw material and finished plastic goods.

The industry demanded that in order to prevent under-invoicing by foreign players, a floor price should be established on finished goods.

“There is a need for the Directorate General of Foreign Trade to recommend anti-dumping duty on finished plastic goods originating in or imported from three major dumpers, including China, for at least five years,” said an expert.

Existing FTAs with various countries have failed to yield desired result. It has resulted in massive import of finished goods from FTA countries into India at zero or concessional duty, thereby badly affecting competitiveness of Indian plastics processing industry. However, exports from India to these countries have marginally grown leading to huge trade imbalance. Therefore, industry has demanded that all existing FTAs be reviewed and polymers and products made of polymers shall be excluded from all FTAs.

Also, there is a need for the government to implement Bureau of Indian Standard (BIS) quality products to prevent circulation of poor quality products in the market.

“The industry demanded that custom duty of polyvinyl chloride (PVC) should be brought down from 10 per cent to 7.5 per cent as nearly 50 per cent of demand in India is being met through imports due to lack of domestic capacity. Any increase in custom duty will affect the agriculture sector due to high use of PVC pipes and fittings,” Mehta added.