88,000 Manufacturing Units To Go Bankrupt In India

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What’s happening?

As the government prepares to enforce a ban on single-use plastic products from July 1,
The All India Plastic Manufacturers Association (AIPMA) has warned that the move could leave about 88,000 units bankrupt.

“Based on government data, about 88,000 units are engaged in the manufacturing of single-use plastic in the country.
These units employ about 1 million people and contribute to exports worth Rs 25,000 crore,” said Jayesh Khimji Rambhia, co-chairman of the environment committee of AIPMA.

The Ministry of Environment, Forest and Climate Change released a notification in March banning single- use plastic items from July 1.
Such products include plastic plates, cups, glasses, forks, spoons, knives, straws, trays, swizzle sticks, wrapping or packing film, invitation cards, cigarette packets, and
plastic or PVC banners of less than 100 microns.
Other products such as earbuds with plastic sticks, plastic sticks for balloons, plastic flags, wrappers for candy sticks and ice-cream sticks, and polystyrene (thermocol) for decoration also come under the ambit of the ban.

The impact of the ban will be felt across the industries. Fast Moving Consumer Goods (FMCG) makers, the aviation industry and quick service restaurants will bear the brunt, Rambhia said.
“These 19 products are being used by various industries and while their replacements are there in the market, the companies are going to incur huge costs which will be ultimately passed on to the consumer,” he added.
According to Rambhia, while a disposable small plastic cup often used at tea stalls to serve customers costs just 5 paise, its replacement, an earthen kulhad, would cost Rs 1.
Most replacement products will increase the cost of companies by 100-300 percent, he said.

Beverage makers such as Parle Agro, Amul and Dabur, too, had asked the government to push the ban by six months to a year given the limited availability of paper straws, a replacement for plastic straws.
According to the industry, about 6 billion packs of paper-based beverage cartons with integrated plastic straws are sold annually in the country.
The capacity to produce paper straws is only 1.3 million straws per day, against a requirement of 6 million/day.

These companies also flagged cost concerns and said using paper straws will inflate their costs significantly.
While a plastic straw costs 10 paise and accounts for 1% of a Rs 10 beverage carton, a paper straw costs 40-45 paise and would account for 4-4.5% of the cost.
Given the huge impact on the industry of the expected closure of single-use plastic makers,
AIPMA is urging the government to offer some compensation to micro, small and medium enterprises engaged in the trade and also work towards their rehabilitation.

Given the huge impact on the industry of the expected closure of single-use plastic makers,
AIPMA is urging the government to offer some compensation to micro, small and medium enterprises engaged in the trade and also work towards their rehabilitation.
“These MSMEs were running legal businesses; however, they will now be on the verge of bankruptcy due to the change in government policy,” said Rambhia.
“The government should offer compensation when companies, especially MSMEs, get impacted due to a policy change,” he added.
According to AIPMA, these MSMEs, which have a turnover of Rs 1-5 crore, in total have invested about Rs 39,000 crore in these units.
AIPMA said it has also urged the government to rehabilitate these units, which will shut down from July 1.