After complains of cheap imports of plastic raw materials, now the industry is complaining of huge imports of plastic goods at a much lower cost. Most of these readymade plastic products are coming via under-invoicing, giving stiff competition to the local converters.
Under-invoicing started in the last few months because the prices of many plastic raw materials have risen by 50 per cent since December.
In case of under-invoicing, the importers show lower cost of imports in the invoice and try to save customs, excise and other taxes on that. Hence, the resultant tax evasion make these products cheaper. There are nearly 20,000 plastic converters/processors in the country providing jobs to over 3 million people.
| FEELING THE HEAT In Rs/tonne | |||
| Product | Dec 1 ’08 | Apr 9, ‘09 | % chg |
| PPHP | 43400 | 66400 | 53.00 |
| HDPE-UV | 46760 | 69760 | 49.19 |
| HD-PE 100 | 55560 | 77560 | 39.60 |
| LLDPE | 46160 | 70160 | 51.99 |
| LDPE | 50890 | 72890 | 43.23 |
| PVC | 37000 | 47500 | 28.38 |
| GPPS | 53000 | 64000 | 20.75 |
| Brent crude($/bbl) | 51.63 | 51.81 | 0.35 |
| PPHP- polypropylene homo polymer, PPCP- polypropylene co-polymer, HDPE- high density polyethylene, HMHD- high molecular high density, HD- high density, LLDPE- linear low density polyethylene, PVC- poly vinyl chloride, GPPS- general purpose polystyrene, HIPS- high impact polystyrene Data collected from industry sources | |||
M P Taparia, MD of Supreme Industries, a listed plastic goods maker, said that “it is in the interest of the country to import raw materials rather than finished goods as processing will give employment to many labourers.” This is the industry where demand has not been affected much despite the recession. Demand is good as through two stimulus packages, the government has cut excise duties and plastic raw material prices are still much lower than their peak last July-August, said Taparia.
Polymer prices have been rising after bottoming out from December onwards and many polymers are costlier by 40-50 per cent. Only polystyrene and PVC have shown a comparatively slow rise of 20-28 per cent. However, the price of crude oil, from which these materials are produced, has remained stagnant. The fall started in August but it accelerated later. However, October onwards, many refineries all over the world started cutting down production. This has resulted in supply cut and prices started moving up again, said an executive of a leading polymer producer.
Taparia feels that after the reports that new refining capacities will come on stream in West Asia soon, polymer prices would start coming down from June-July.
Industry experts also feel that plastic should not be a part of free trade agreements that India is planning to sign with Asean countries. Since this industry is labour intensive, duty free import of plastic goods hurts the employment generation capacity of the country.
