Budget sops to boost plastics

The Budget sops for the plastics industry has brought down the prices of polymers by Rs 1.50-2.00 per kg. Post Budget, the prices of polypropylene have come down to Rs 55- 60 per kg from Rs 57- 62 range, said industry analysts.

"Six grades of polypropylene are available in the market. LDPE price is hovering around Rs 65- 67 per kg and PVC price is below Rs 40 per kg now," he added.

The Budget has proposed to cut import duty of polyvinyl chloride (PVC), low density polyethylene (LDPE) and polypropylene from 10 per cent to 5 per cent and the duty on naphtha, the raw material for plastic, was altogether scrapped.

Reliance Industries(RIL), Gas Authority of India and Haldia Petrochemicals are the major producers of polymers in the country.

RIL, Asia's largest manufacturer of polypropylene with a combined capacity of over 1 million tonne, holds 70 per cent market share. ''RIL and oil PSUs are the major producers of naphtha and their production is surplus to the requirements,'' analysts said.

''Duty cut has led major producers to reduce the prices and in near future, the plastic industry will reap the benefit," they added.

Harpal Singh, president, All India Plastic Manufaturer's Association, said, "The prices of polymers have come down slightly, but the industry has expected a drop of Rs 5 per kg after the Budget. We are expecting it in the coming days."

"Plastics manufacturers can now import raw materials. For supporting the plastics industry, the government has withdrawn naphtha duty also.This will help polymer manufacturers to reduce the price," Ajay Desai of AIPMA said.

"If the raw material cost is not reduced, the domestic plastics industry will go for import. RIL and IOC, the major producers of naphtha in the country, will have to keep an eye on international prices. But competitive price cut is unlikely from the companies as they would not compromise on the profit margin," the Industry analyst added.

"RIL and its group company Indian Petrochemicals Corporation have always kept its prices lower than the landed price of polymers. To that extent, the present duty cut is unlikely to have an impact on the company's sales or lowering of prices," the analyst said.