The Hindu Business Line : Plastic goods, polymers at loggerheads

"The global naphtha prices have increased only 9.5 per cent in the last nine months but the prices of PP, HDPE and LLDPE have increased from 30-40 per cent in the domestic market."

Kolkata , Sept. 7

AFTER the row in the steel sector, it is now the turn of the plastics industry to witness a major tussle between the thousands of goods manufacturers and the handful of polymer producers.

Several bodies of plastics goods manufacturers are lobbying with the Union Finance Ministry for temporary abolition of the 20 per cent customs duty on polymer imports and 10 per cent DEPB (duty entitlement pass book scheme) rate on polymer exports. They are also trying to convince the Union Government that the four major polymer producers, Reliance Industries, Haldia Petrochemicals (HPL), IPCL and GAIL (India), have adopted monopolistic practices and formed a cartel to dictate prices.

"The global naphtha prices have increased only 9.5 per cent in the last nine months but the prices of PP, HDPE and LLDPE have increased from 30-40 per cent in the domestic market," Mr J. C. Agarwal, President of the Indian Plastics Federation told Business Line.

Unlike Mr Agarwal, office-bearers of other bodies have nothing against the polymer producers. "Instead we would request the Union Government to reduce the customs duty on polymer imports or, if possible, abolish it," said Mr S.J. Atre, President of the Mumbai-based All-India Plastic Manufacturers Association.

They said the existing customs duty is "protective" in nature and polymers manufacturers no longer need such "protection" after enjoying it for more than a decade. According to them, the spiralling polymer prices will force them to shut down their units.

The situation further worsened with the report that a Kolkata-based debt-ridden plastic goods producer had committed suicide recently. To mark their protest, a Chennai-based plastic processors body has called for a token hunger strike. Members from others organisations are likely to participate in that meet.

The Nepal factor is another contentious issue. It was stated that polymer producers are enjoying 10 per cent DEPB benefits by exporting to Nepal. In return, plastic goods are being re-exported into India from Nepal free of all duties.

The other allegation is the formation of a cartel. "Whenever anyone increases the price, others immediately follow it," Mr Agarwal said.

Mr B.L. Rastogi, President of the Delhi-based All-India Plastics Manufacturers Association, said there was "unanimity" among the polymer players. Polymer producers have denied all allegations. A senior HPL official clarified that domestic polymer prices have always remained cheaper than the landed prices of the imported polymer. "We have not formed any cartel. It is bogus, but the fact is that if one player increases price, then we will have to increase to earn the benefits," the HPL official said. Regarding exports, he said that they opt for duty drawback, so DEPB is of no benefit to them. "When IOC exports naphtha, it earns 12 per cent DEPB but after value addition on the same naphtha we get only 10 per cent DEPB on polymer exports. Moreover, import duty on naphtha is 10 per cent. Why is this ambiguity," he asked.