Punjab PET firms moving to Himachal

After engineering and pharmaceutical companies, now it is the turn of PET (polyethylene terephthalate, in fibre form known as polyester) bottle manufacturers to shift their base from Punjab. The reason? The differences in the tax structure.

Besides, the high density of pharmaceutical units in Himachal Pradesh is also attracting the PET bottle manufacturers. Four companies have migrated to the hill state and more are expected to join the bandwagon in the near future.

Currently, the state has about 22-25 PET bottle manufacturers, majority of them being in the small sector, having a turnover of Rs 25 lakh per day. The PET bottle manufacturers are located in Ludhiana, Mohali, Amritsar, Moga etc.

Compared to Himachal Pradesh, where PET manufacturers avail tax benefits, Punjab PET manufacturers have to shell out 16 per cent excise duty in addition to the 4 per cent VAT.

Speaking to Business Standard, Kavinder Singh Bains, managing director, Ascent Clearform Moulding (P) Ltd, said: "The demand for PET bottles is increasing at 15 per cent per annum, showing the huge potential in the sector."

The changing customer habits has helped in the growth of packaging materials. With more and more women entering the corporate world and middle-income families climbing up the income ladder, the market for convenience products is growing, both in the food and non-food sectors. The market for ready-to-eat microwave-able food items, light and convenient packing materials, easy-to-pour dispensing caps etc., is booming. Even the rural sector is contributing to the demand of PET bottles.

Commenting on the tax structure, Bains said: "With the demand, competition is also increasing. In Punjab, we have to pay 16 per cent towards excise duty and 4 per cent as VAT, while our competitors, having manufacturing facility in Himachal Pradesh, are enjoying tax holiday."

Taking into consideration the tax benefits enjoyed by Himachal manufacturers, even Bains has planned a unit in the hill state, having manufacturing capacity of 2 tonne per day.

He said, "We are setting up a unit in Una district of Himachal Pradesh. Initially, the production capacity would be 2 tonne per day and later on it can be expanded."

However, he added that he had no immediate plans to shut his unit in Punjab, but the production capacity would be lowered.

Experts are also of the view that the high density of pharmaceutical units in Himachal Pradesh has also motivated the PET bottle manufacturers to set up their unit in the hill state.

Their are approximately 100 units in the northern India, of which about 50 are in Himachal Pradesh, 22-25 in Punjab and the rest in Haryana and Jammu and Kashmir.