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Plastic makers left in the lurch after government bans single-use plastic

Thousands of small enterprises making single-use plastic and related businesses claim to be on the verge of bankruptcy with the ban on certain products. The lack of dialogue with the government and the absence of a rehabilitation package has disgruntled manufacturers.

July 05, 2022 / 02:52 PM IST
The Central government has banned the manufacture, import, stocking, distribution, sale and use of identified single-use plastic items that have low utility and high littering potential all across the country from July 1. (Source: AFP)

The Central government has banned the manufacture, import, stocking, distribution, sale and use of identified single-use plastic items that have low utility and high littering potential all across the country from July 1. (Source: AFP)

“I’ve been in this industry for 27 years and am the oldest manufacturer of single-use cups, plates and spoons in Uttar Pradesh,” Mohit Bansal, owner of Lucknow-based Avadh Polymers, told this writer with much pride over a call. The very next second though, helplessness creeped into his voice as he spoke about the Uttar Pradesh government’s ban on single-use plastic about three years ago.

“We tried to reach out to the government several times and even met the chief minister’s principal secretary. However, we were categorically told that Yogiji will not listen to anything on plastic,” he said.

The manufacturers approached the Allahabad High Court in an attempt to seek relief, but Bansal claimed even the judiciary was unsympathetic to their cause. He said his turnover of Rs 15 crore (at the time of the ban) was wiped out and he had to let go of 100 employees.

“I had a term loan of Rs 70-80 lakh at that time, which I am still trying to pay off,” he added.

“At least they could have offered us a relief package.”

The UP government banned plastic products such as single-use carry bags of less than 50 microns, cups and cutlery under the Plastic and Other Non-Biodegradable (regulation of use and disposal) (Amendment) Act 2018.

While 25 other states banned single-use plastic products around the same time, most were unable to ensure strict implementation.

Bansal, who headed the association of single-use crockery manufacturers in the state at that time, said the ban led to 100 units in their category (plastic crockery) shutting down and over 6,000 jobs were impacted directly.

Now, the Central government, too, has banned the manufacture, import, stocking, distribution, sale and use of identified single-use plastic items that have low utility and high littering potential all across the country from July 1.

While the move received wide applause, small businesses in this segment claimed the establishment is “unsympathetic and indifferent” to their plight.

Collateral damage

In the run-up to the ban, several associations and manufacturers from the single-use plastic ecosystem urged the government to push the deadline, offer a relief package, or help rehabilitate them, but to no avail. The government’s move, manufacturers indicated, could lead to lakhs of job losses and loan defaults worth crores of rupees.

However, it is difficult to gauge the magnitude of the ban, given the complex supply-chain of plastic manufacturing that involves hundreds of small enterprises at every step, some of which have a turnover of less than Rs 1 crore a year.

“Even the government does not know the number of the MSMEs (micro, small and medium enterprises) that are involved in the manufacturing of single-use plastic. The figure may run into thousands or even lakhs. A lot of them are still operating in an informal way,” said Siddharth Ghanshyam Singh, programme manager at the Centre for Science and Environment (CSE), a public interest research and advocacy organisation in New Delhi.

According to Singh, making any single-use plastic item, especially products with multiple layers or multi-layered plastic (MLP), involves many stakeholders.

“Take shampoo sachets, for example. There are actually five-six different converters (as they are called in the industry) involved in the manufacturing of this MLP. One converter will just work on the PE layer, other on the PPE layer, then next one the aluminium coating, and then someone will fuse them together before an FMCG company packages its shampoo,” he said.

Sachets so far have been kept out of the ambit of this ban.

The All India Plastic Manufacturers Association (AIPMA) suggests that about 88,000 units are engaged in manufacturing single-use plastic. These units employ about 1 million people and export products worth Rs 25,000 crore.

The Thermoformers and Allied Industries Association (TAIA), whose members make single-use plastic crockery such as plastic plates, cups, forks, spoons and knives, said it has 850 manufacturers across India. The manufacturers employ 200,000 people directly and 500,000 people indirectly and generate sales of Rs 10,000 crore a year.

“Our members have loans and outstandings worth Rs 5,000 crore,” claimed Ankur Nagpal, general secretary of TAIA.

Plastic crockery is only one category of products banned by the Ministry of Environment, Forest and Climate Change. Others include straws, trays, swizzle sticks, wrapping or packing film, invitation cards, cigarette packets, and plastic or PVC banners of less than 100 microns.

“These MSMEs were running legal businesses. However, they will now be on the verge of bankruptcy due to the change in government policy,” said Jayesh Khimji Rambhia, co-chairman of the environment committee of AIPMA.

Plastic waste 0507_001

FMCG ‘lobby’

MSMEs operating in the segment are especially piqued with the government’s inaction on sachets used by FMCG companies, which they said are far bigger pollutants than their products. Products from shampoos and conditioners to gutka and ketchup are among those sold in sachets.

“Biscuits, wafers, namkeen wrappers, shampoo sachets, detergent packs – all of these are multi-layered structures and it is challenging to recycle them. However, they have still been kept out of the ambit of the ban,” said Bhavesh Bhojani, a Mumbai-based manufacturer in the thermoforming supply chain. “We are small, so our voice does not reach the government but multinationals have strong lobbies.”

Maharashtra had imposed a much stricter ban on single-use plastic in 2019 to stop the consumption of these products in the state. According to Bhojani, about 38 thermoformers in the state had to shut down or shift to nearby areas like Vapi and Daman.

Singh of CSE agreed that the “lopsided ban by the government” affects small businesses the most.

“It leaves out the giant players, who are actually responsible for most of the products that are being put out on the market,” he said.

Singh, however, also pointed out that even FMCG packaging products are produced by small units and a ban on sachets would have ultimately impacted them.

The government, said environmentalists, left out packaging products by FMCG companies because they are covered by the Extended Producer Responsibility policy, which requires them to recycle plastic waste after consumption.

Given the complex and unorganised supply-chain of single-use plastic manufacturing in India, it will be difficult to bring in MSMEs under the EPR mandate, said environmentalists.

“The government is yet to effectively implement EPR and even giants like PepsiCo and the Coca-Cola Company have not been able to register, so imagine how challenging it will be for MSMEs,” he added.

Ragpickers and microns

The marginalised community of ragpickers are protagonists in the story of the ‘plastic economy’ whose actions (inadvertently) often decide what’s to be phased out and what remains.

All items covered by the ban have a high littering propensity and are unlikely to be picked up by a ragpicker, eventually making their way into landfills and water bodies and polluting them, environmental activists said.

“Have you ever seen a ragpicker pick a straw or a plastic cup?” Singh of CSE asked. “But you will see them collecting PET bottles because they offer value.”

A survey conducted by CSE last year found that a ragpicker gets Rs 18-25 for a kg of PET bottles. To draw a similar amount by collecting straws or even paper cups, a ragpicker would have to collect enormous amounts of waste, which would require tremendous effort. The easier way out for them is to focus on product waste with higher value.

The government, in an effort to offer higher value for products such as plastic bags, has notified an increase in the microns or thickness of products. From December 2022, according to government norms, plastic bags of less than 120 microns will be banned in the country. Last year in September, the government had increased the thickness requirement to 75 microns from 50 microns prescribed earlier.

Single-use plastic manufacturers argued that the government could also have increased the micron norms for their products instead of banning them.

Activists, however, said the government had banned products that offer very low collection value to ragpickers and those where the cost of recycling them is higher than the price of recycled products.

“It does not make business sense to recycle these products as finished products will not fetch any profits to the recycling unit,” said Chandra Bhushan, president of the International Forum for Environment, Sustainability & Technology, an environmental research and innovation organisation.

Bhushan, however, also questioned the inaction by these manufacturers when they were aware of the policy to phase out plastic.

“The discussion to ban single-use plastic started as early as 2017. However, the ban was not effective as authorities were lax in several states,” said Bhushan. “The problem is manufacturers also assumed that it will not be strictly enforced, as is the norm in India.”

The countrywide ban, however, has made manufacturers realise that the government is serious about phasing out plastic as much as possible. However, industry stakeholders and environmentalists both agreed it should not be at the expense of small units operating in the segment.

Search for alternatives

Manufacturers are now trying to figure a way out. For units in Maharashtra and UP, which had worked around the stringent ban for the past few years, the solution may lie in making single-use plastic products that have not been banned.

Bansal of Lucknow manufactures plastic containers that restaurants and food aggregators use to deliver food, a product that has not been banned yet.

“I am aware that this too could be banned one day, but manufacturing single-use plastic is all I know. How can I change my business overnight?” he asked.

Some manufacturers are waiting for clarity and plan to invest in machines to make alternative products, but the government is yet to come out with a list of products that can be made, they claimed. Others have switched to making products like paper cups.

“Some of the people I know are now importing machines to manufacture paper cups and investing crores. We know paper cups also have a thin plastic layer and one of these days, the government will ban it too,” said Bhojani.

Environmentalists indicated that given the lack of rehabilitation and relief packages and alternatives, makers will either switch to non-banned plastic products or continue manufacturing banned products illegally.

“Someone who is already in this business of manufacturing plastic will not suddenly shift from manufacturing plastics to alternatives because he will have to create an entire new ecosystem from scratch,” said Singh.

The success of the ban also rides on the availability of alternatives, analysts said but, as industry stakeholders indicated, the government has not taken many initiatives to offer alternatives to manufacturers or consumers.

“Any regulatory intervention in the environment is also an intervention in the economy. Therefore, the government should have offered an alternative promotional package considering a large number of small-scale manufacturers in the industry,” says Bhushan.

Devika Singh