Downstream polymer processing units from Gujarat are moving out to tax-free havens like Himachal Pradesh and Uttarakhand and neighbouring Daman-Silvassa, blaming high power tariffs.
Jigish Doshi, a former president of Gujarat State Plastics Manufacturers Association (GSPMA), said that of the 7,000 odd units in the state, nearly 700 are medium-sized units, while more than 50 per cent are small-scale units.
“Nearly 10 per cent of these medium-sized units are moving out of the state and the process started around four-five years back,” he explained.
The estimated loss of business is pegged at $100,000 (about Rs 47 lakh at today’s rupee-dollar exchange rate) over the last four to five years, industry insiders claimed.
The high power tariff has been a hurdle to the growth of power-intensive industrial units in the state. Plastics processors in Gujarat claimed that while the cost of power for industrial units is around Rs 5 per unit here, it is much lower at Rs 2.4-2.9 per unit in Himachal and Uttarakhand.
The power tariff in neighbouring Daman-Silvassa is also as low as Rs 2.5 per unit, almost half that in Gujarat.
Spiralling land costs have pushed up manufacturing costs further. “For a medium-scale downstream unit, if the land cost is more than 5 per cent of the total project cost, it is not viable. It currently comprises nearly 10 per cent of the project cost,” Doshi said.
The major polymer processing belts in the state are in Ahmedabad, Saurashtra, Baroda, Halol, Bhavnagar and Vapi. Gujarat is India’s largest producer of woven sacks, housing more than 2,700 units. However, at nearly 90,000 tonnes per annum (tpa), it currently accounts for only 15 per cent of all-India polymer processing.
India’s polymer capacity is around six million tonnes per annum (mtpa), and Gujarat accounts for nearly 60 per cent of the net production. The net investment in the plastics processing sector here is about Rs 70,000 crore, and annual business generated is Rs 150,000 crore.
