The mandatory implementation of Bureau of Indian Standards (BIS) regulations on the import of polymer raw materials would have significant implications for plastic processing industry both for the domestic industry and the export sector, industry executives said.
These regulations, designed to ensure quality and safety standards, would definitely influence on various facets of the industrial landscape but would pose major challenges for plastic processors who are dependent on imports. It is feared that production would be impacted as a result of implication of this policy.
“Presently, the Indian plastic industry is vastly import dependent for its raw material requirements. While plans to scale capacity is yet a long way off, in the short term, such a move is more likely to cause major hurdles as imports of plastic finished goods are nearly as much as exports of plastic finished goods. The main reason is that imported goods land cheaper in India than that are produced locally”, said Hemant Minocha, Chairman, Plexconcil in a statement.
“Polymers (raw materials) are expensive in India by as much as 10-15% as compared to prices (net of taxes) in China or other Asian countries. By imposing mandatory BIS on polymers, raw material prices will increase further,” he said.
“Not all foreign suppliers will register for BIS as it entails special marking on bags, inspection of their production facilities, and payment of marking fees to BIS and these additional measures required would be a deterrent who may altogether suspend supplies to Indian processors,” he added.
“This will increase the CIF prices further. It will severely affect the processing industry. Once CIF prices are higher, whether a processor is buying polymers for production of domestic or export goods, they will be rendered uncompetitive as compared to competing countries. Not all grades of polymers are produced in India, whereas mandatory BIS is imposed on the HSN itself, thereby creating a barrier in imports for all grades of that polymer,” he further said.
“The Indian plastics industry mostly comprises the MSME sector and higher costs of raw material will make it difficult for MSME polymer processors to compete with imports of cheap finished articles of plastics which will not be governed under any Quality Control order and since they will be substantially cheaper in prices, they will garner a large market share. To be competitive in exports, an entity must derive benefit from economies of scale which is only possible if it has a robust domestic demand.” said Arvind Goenka, Past Chairman, Plexconcil.
“The implications for the export sector are multifaceted. On one hand, the imposition of BIS regulations on polymer imports could potentially enhance the reputation of Indian exports of finished plastics in the global market but on the other hand it can have a bearing on the input costs making the export product uncompetitive in several markets,” he said.
“The immediate aftermath of enforcing BIS regulations might pose challenges for exporters. Compliance with these regulations could necessitate adjustments to existing manufacturing processes and sourcing networks, and not to mention higher input costs that will impact cost of exports too,” Mr Goenka added.
Industry officials said the mandatory BIS should be imposed on the complete value chain and not only on polymers alone so that cheap quality & low priced finished goods are not flooded in India leading to crippling of the MSME plastic processors. It will also ensure a better quality finished goods at the hands of the consumer, they added.
Mandatory BIS standards on finished goods can be implemented in a phased manner to include those finished goods imported in large volumes, or those which are already produced according to BIS & other standards or those products which have a direct relation to health & safety, they further said.
