Economy

Sharp rise in polymer prices hit MSMEs

Our Bureau Mumbai | Updated on March 02, 2021

Trade bodies urge Centre to ask public sector units to streamline supply of raw materials at fair prices

After the sharp rise in steel and cement prices, the plastics processing sector has raised concern over substantial increase in the price of key raw material polymer on the back of alleged artificial shortage created by petrochemical companies including some of the public sector units.

Almost 50,000 micro, small and medium enterprises, which were operating at 50 per cent capacity utilisation, are on the verge of closure if the current raw material crisis continues, industry insiders say.

‘Artificial shortage’

Industry bodies have slammed large petrochemical companies for increasing prices by 40-155 per cent in last 8-10 months by creating shortage of raw material in the market to encourage premium and black-marketing. The plastics processing industry has urged government intervention to allow duty-free imports of raw materials besides banning export of raw material for one year.

Arvind Mehta, Chairman, Governing Council of the All India Plastics Manufacturers Association, said the increase in raw material costs and acute polymer shortage are leading to escalation in project costs besides impacting cost competitiveness of MSMEs.

Cascading effect

Arvind Goenka, Chairman, Plastic Export Promotion Council, said exports of finished products are falling as polymer prices are substantially higher than in the competing countries. If the price increase continues, export of plastics goods from India will nose-dive as Indian manufacturers would fail to meet global order commitments, he added.

The farm sector is expected to be the worst-hit as prices of plastic pipes, drip irrigation system, water tanks, mulch films and woven sacks will all see a sharp jump.

The rising plastic price will also impact consumers hard in these corona times when their income has already reduced, said Ramesh Kumar Rateria, President, Indian Plastics Federation.

The trade bodies have urged the Centre to ask public sector units such as Indian Oil, GAIL, OPAL, Haldia Petrochemicals and MRPL to streamline the supply of raw materials in adequate quantity to the MSME sector at fair prices.

Published on March 02, 2021

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