Hike in Plastic Raw Material Prices hit MSME Plastic Units

KOCHI:
The plastics industry is in crisis due to sharp rise in raw material prices and unavailability of raw materials. Many small and medium enterprises in the state are facing the threat of closure. There are 1340 units operating in the plastics industry, which directly and indirectly employs over one lakh people. Due to the scarcity of raw materials, many units are able to utilize less than fifty per cent of their working capacity.

Petrochemical companies, including PSUs, had exponentially increased raw material prices by 50 to 155 % in the last 6 months. Plastic processors have blamed large petrochemical companies’ hikes in raw material prices without any commensurate increase in their feedstock. Due to lack of availability, the plastics industry is forced to buy raw materials from the market by paying Rs.15 to 20 extra. Regarding exports, Indian manufacturers are in a crisis of not being able to deliver global orders on time. Inflation and shortage of raw materials will also affect the prices of plastic pipes, drip irrigation systems, water tanks and woven sacks. Toy makers are also in crisis.

The increase in raw material costs and its acute shortage in market are leading to escalation in project costs and are adversely impacting the cost competitiveness of MSMEs, said Kerala Plastic Manufacturers Association State President Balakrishna Bhat Kakkunje and General Secretary M.S. George. Other sectors that use plastic products as raw materials are also expected to see a significant increase in production costs, they said.

The association also urged the Union government to ask public sector companies such as Indian Oil, GAIL, Opal, Haldia Petrochemicals and MRPL to streamline supply of raw materials at fair prices. Former President of the Association P.J. Mathew urged the government to ban the export of the raw materials for one year.