The US decision to revoke Generalised System of Preferences (GSP) benefits to Indian goods has hit several plastic exporters but opportunities provided by the US-China trade war could offset this setback, global trade finance company Drip Capital said on Thursday.
The United States and China are traditional importers of plastic and have shown high growth in recent years. But the recent trade tensions between India and the United States post the removal of GSP benefits for Indian goods have created uncertainty about future plastic trade between the two nations.
"However, data show that contrary to popular belief, Indian plastic exports to the United States have grown even as overall plastic exports from the country have declined," said Drip Capital in a report prepared in association with the Plastic Export Promotion Council of India (PLEXCONCIL).
This is a hopeful sign for the sector's future. Southeast Asia, Africa and Latin America are other markets rapidly developing markets that exporters should explore in the coming months to boost their shipments.
India is the 17th largest plastic exporter globally with exports totalling eight billion dollars of the global market of 600 billion dollars. With steadily rising global demand, India's plastic exports have grown at a compound annual growth rate of 11 to 12 per cent with nearly 65 per cent of these exports coming from micro, small and medium enterprises.
Gujarat and Maharashtra currently contribute 60 per cent of all of India's plastic exports. Other notable exporting territories include Madhya Pradesh and West Bengal and union territories of Daman & Diu and Dadra & Nagar Haveli.
Stakeholders are targeting plastic exports worth 25 billion dollars by 2024-25. However, Drip Capital's report forecast subdued growth for plastic exports in the coming quarters.
"There is an urgent need for policy interventions in the sector, in the form of incentivisation for technology upgradation as well as research into environmentally friendly alternatives like biodegradable plastic," it said.
Another major factor to consider is the impact of plastic bans in various countries around the world and rising environmental consciousness among consumers.
"Many countries like France and China have banned plastic goods entirely, necessitating a shift away into other possibilities like recyclable and biodegradable plastics," said Pushkar Mukewar, Co-founder and Co-CEO of Drip Capital.
"Exporters need to explore these options in greater detail, while also pushing the government and other stakeholders to undertake research and policy measures into the sector."
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