At a time when the government of India is advocating the ‘Make in India’ concept in an effort to make the country ‘aatmanirbhar’ across all manufacturing products, plastic is one such sector where a holistic approach is still required to reduce increasing reliance on the finished products’ import. High production and raw matieral costs have been a major factor to make India’s plastic products uncompetitive even in the domestic markets and hence, producers from China and South East Asia (SEA) have been increasing their market share at the cost of local producers.
Data assembled by the premier trade body All India Plastics Manufacturers' Association (AIPMA) showed India’s import of finished plastics products has jumped by a staggering 52 percent in 2021 (the latest data available). AIPMA reported India’s import of the leading 10 plastics products at Rs 17,093.38 crore in the calendar year 2021 compared to Rs 11,220.12 crore last calendar year. In the previous two years at least, India’s plastics import remained stagnant at around Rs 11,000 crore.
| India’s polymer import for calendar 2022 |
| Particulars | Volume (‘000 tonnes) |
| Polyvinyl chloride (PVC) | 1435 |
| Polypropylene (PP) | 960 |
| High-density polyethylene (HDPE) | 595 |
| Linear Low-Density Polyethylene (LLDPE) | 540 |
| Low-Density Polyethylene (LDPE) | 340 |
| Polycarbonate (PC) | 229 |
| Ethylene-vinyl Acetate (EVA) | 182 |
| Polyamide (PA) | 170 |
| Chlorinated Polyvinyl Chloride (CPVC) | 164 |
| Polyethylene terephthalate (PET) | 140 |
Source: All India Plastic Manufacturers Association (AIPMA) website
India’s import of plastic products continued thereafter as well. During the January – March 2022 quarter, India’s import of plastics products continued with an estimated value of Rs 6,841.53 crore. Assuming that this growth trend continued throughout the rest of the period, India’s import of plastic products could have reached Rs 27,370 crore on an annualized basis for the full calendar year 2022. This indicates over 60 percent growth in India’s plastics import during the calendar year 2022.
“Quality, cost, and delivery are the three major factors that have affected India’s growth in the domestic plastic industry and hence, increased import. Indian producers don’t have the right technology which we need to have on priority. As a responsible body, AIPMA has come out with a study on plastic import substitution. We have identified products that have seen a significant increase in imports over the last few years. We are creating consumer awareness through national level seminars where AIPMA is educating producers and consumers with import substitution,” said Deepak Ballani, Director General, AIPMA.
| Top 10 suppliers of plastic products to India (Rs crore) |
| Country | 2018 | 2019 | 2020 | 2021 | 2022* |
| China | 4,547.98 | 5,179.17 | 5,392.92 | 8,973.49 | 3,530.15 |
| United States | 1,457.88 | 908.43 | 920.05 | 1,148.75 | 357.15 |
| South Korea | 642.66 | 709.08 | 791.94 | 964.34 | 425.99 |
| Thailand | 527.96 | 929.02 | 569.50 | 769.55 | 353.75 |
| Germany | 642.76 | 518.99 | 580.73 | 831.47 | 355.59 |
| Japan | 508.85 | 446.07 | 392.44 | 569.07 | 190.54 |
| Italy | 379.88 | 455.35 | 405.32 | 569.22 | 121.93 |
| Vietnam | 163.20 | 180.39 | 175.32 | 640.66 | 402.62 |
| Taiwan | 316.68 | 307.40 | 305.48 | 397.22 | 161.78 |
| Indonesia | 174.92 | 192.53 | 197.96 | 223.31 | 112.59 |
| World total | 10,989.50 | 11,383.76 | 11,220.12 | 17,096.38 | 6,841.53 |
Source: All India Plastic Manufacturers Association (AIPMA); *January to March
Raw material shortageIndia is import-dependent for over 55 percent of polyvinyl chloride (PVC), the key raw material for plastics production. While the domestic primary polymers (raw materials) producers have already proposed to set up an additional capacity, the move towards making India self-reliant in polymers is very slow due to extremely high capital requirements and a long gestation period for return on investment.
New entrant Adani has already suspended its proposed plan to produce 2 million tonnes of coal-based PVC project on account of unforeseen circumstances. India also imports a huge quantity of other polymers such as high-density polyethylene (HDPE), low-density polyethylene (LDPE), polycarbonate, and polyamide, among others to meet its requirement. But, industry representatives feel that awareness is very important.
“We are trying to educate people about cost-effective plastic production, improvement in the supply chain, raw-material innovations, machining technology and expectations of importers, etc. We take a holistic and comprehensive approach while meeting with the industry people in a seminar and otherwise so that import substitution can happen proactively in India. Through all these practical approaches, we can estimate a sharp decline in India’s plastics import in the next couple of years,” said Ballani.
“Raw materials are costlier in India compared to the competing countries. Our input cost is at least 10-15 percent higher than that in China and South East Asian countries. With high input costs, the cost of production of finished plastic products eventually goes up. With high labour and other costs, we become uncompetitive in the domestic markets. India has also granted concessions to Vietnam and Thailand under Free Trade Agreement (FTA) which allows these countries to dispatch more products to us. As a consequence, the landing of products in India works out to cheaper than the selling price offered by domestic producers,” said Arvind Goenka, Managing Director, RMG Polyvinyl India Ltd.
For these goals to achieve, the industry wants a proactive approach from the government also. Easy availability of raw materials at a cost-effective price is the first and foremost requirement. Along with this, the government also requires to extend policy-level support to the industry. There is an urgent need to make a policy enabler to restrict cheap import from India’s neighbouring country i.e. China through an increase in import duty on plastic finished goods. There should not be any non-tariff barriers on plastic machines, raw materials, and other allied products.
In addition to local markets, India is uncompetitive in the world market also. Several buyers from Europe, the United States, and elsewhere want to deal with Indian producers. We don’t have the scale to meet their demand and capture the opportunity. Fresh investment in the Indian plastic industry was very slow in the past few years due to very low profitability mainly in the MSME segment for plastic processing and hence, could not achieve the scale it deserves. As a result, India’s plastic export growth remained stagnant for the last several years.
“Presently, a 10 percent import duty is applicable on value-added plastic import which needs to be increased to 20 percent. A select few plastic items do attract higher duty of 15 percent but such goods are majorly imported from countries with whom India has signed Free Trade Agreement (FTA) and importers actually pay negligible or ‘nil’ duties,” said Goenka.
Additionally, the government is also offering a lot of incentives to the manufacturing industry of which production-linked incentive (PLI) has been the most popular and successful as well. The industry wants the government to extend the PLI scheme to the plastic manufacturing industry as well. Both the industry and the government need to work together to reduce India’s burgeoning plastic imports and make the country self-reliant on these items. The industry will bring in technology while the government needs to support it with favourable policies.
DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com
