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A sharp jump in polymer prices has put the plastics industry in a tight spot. The current liquidity crunch, plus costly raw material, is hurting the 50,000-odd units, most of which are small and medium enterprises (SMEs).
Traders say polymer prices have risen 25-30 per cent in less than six months, to Rs 110-125 a kg.
“The sharp increase has left many units inoperable. The majority are small units and operate with very low margins. They would not have the financial resources to absorb such a steep hike. This is one of the sharpest rises in the past 10-15 years,” said Ramesh Thumar, president, Gujarat Plastic Manufacturers’ Association.
Industry insiders say the prices are also subject to fluctuations in currencies and the rupee’s long fall against the dollar has been a problem, though there has been a recovery of 8.6 per cent in the past two weeks.
Some are optimistic. According to M P Taparia, managing director, Supreme Industries, even if costs remain high and the liquidity crunch persists, the industry will continue to grow this year.
“The growth might be less than the 12 per cent we saw last year. But with good crop prospects this year and resumption in exports, we are optimistic,” he said.
Still, the All India Plastic Manufacturers’ Association (AIPMA) has appealed to the Union finance minister to enhance the sanctioned working capital criteria for lending to SMEs in the sector, by at least 30 per cent. They sent a petition on September 11. The association also asked that the import duty on all plastic products be increased to a minimum of 20 per cent. AIPMA has also requested the minister to roll back the import duty on polymers.
“We are suffering for no fault of ours. We are not asking the government to be protectionist for us. This is an attempt to request a level playing field,” said Arvind Mehta, chairman of AIPMA’s governing council.
Traders say polymer prices have risen 25-30 per cent in less than six months, to Rs 110-125 a kg.
“The sharp increase has left many units inoperable. The majority are small units and operate with very low margins. They would not have the financial resources to absorb such a steep hike. This is one of the sharpest rises in the past 10-15 years,” said Ramesh Thumar, president, Gujarat Plastic Manufacturers’ Association.
Industry insiders say the prices are also subject to fluctuations in currencies and the rupee’s long fall against the dollar has been a problem, though there has been a recovery of 8.6 per cent in the past two weeks.
Some are optimistic. According to M P Taparia, managing director, Supreme Industries, even if costs remain high and the liquidity crunch persists, the industry will continue to grow this year.
“The growth might be less than the 12 per cent we saw last year. But with good crop prospects this year and resumption in exports, we are optimistic,” he said.
Still, the All India Plastic Manufacturers’ Association (AIPMA) has appealed to the Union finance minister to enhance the sanctioned working capital criteria for lending to SMEs in the sector, by at least 30 per cent. They sent a petition on September 11. The association also asked that the import duty on all plastic products be increased to a minimum of 20 per cent. AIPMA has also requested the minister to roll back the import duty on polymers.
“We are suffering for no fault of ours. We are not asking the government to be protectionist for us. This is an attempt to request a level playing field,” said Arvind Mehta, chairman of AIPMA’s governing council.
