If and when the ban is implemented, it could affect close to 10,000 plastic manufacturing units. There is a high possibility that about 400,000 people working in these units could find themselves jobless.
Abhijit Kumar Dutta
It may not exactly have been a déjà vu moment when Prime Minister Narendra Modi announced the intent of scrapping single-use plastics during his Independence Day speech. However, one could not help but recall the night of November 8, 2016, when Modi stunned all by banning high denomination currency notes. It was also from the same ramparts of Red Fort where he had announced the winding up of the Planning Commission during his first Independence Day Speech in 2014.
The three unrelated announcements are neither comparable in their dimensions nor their impact, but they certainly betray the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) government’s penchant for making announcements that catch everyone unawares — a shock therapy of sorts. After Modi decided to punch the air out of the plastic bag this Independence Day, the clueless industry is at its wits’ end to gauge the ramifications of such a decision.
While the intent of the move is good, it is not clear if the government had done thorough economic and environmental cost-benefit analyses before the Prime Minister went ahead and made the announcement. In fact, Modi’s reiteration of his stand at a recent world climate change crisis meeting in Delhi has made the plastic industry jittery.
As of now, neither is there any clarity on the deadline for the enforcement of this ban nor is it clear which items will be categorised as single-use plastics. According to a CNBC-TV18 report, the Central Pollution Control Board (CPCB) has identified 12 single-use plastic items to be initially banned. These items are: thin carry bags, non-woven carry bags, small wrapping, straws, plastic cups, bowls and plates, plastic sticks for earbuds, balloons and flags, cigarette butts, small plastic bottles, thermocol, and thin roadside banners. This initial list has been drawn up from a larger 64 single-use plastic items' list. The report also suggests that the government and the CPCB have asked the industry for its views, seeking both alternatives, as well as modifications to the proposed list.
While the industry awaits clarity on which items fall under the bracket of single-use plastics, estimates suggest that they could constitute 4-7 per cent of raw material used in the manufacturing process. This means that 4-7 per cent of raw materials could be wiped out in the chain of manufacturing.
Going by available reports, if and when the ban is implemented it could affect close to 10,000 plastic manufacturing units. There is a high possibility that almost 300,000-400,000 people working in these units could find themselves jobless. Estimates suggest that there are about 50,000 plastic manufacturing units in India and about 90 per cent of these are medium and small units (MSMEs).
Among the industry sectors, the FMCG, auto and infrastructure are likely to be heavily impacted by this ban. At a time when industry is battling a consumption slowdown, the arrangement for alternative packaging may push up their costs.
Depending on the exact wordings of the ban, a large part of the existing investments, machinery, business processes and jobs in the plastic industry could become redundant. Businesses will find themselves saddled with dud equipment and will have to incur additional costs to replace old machinery. Big companies might be able to afford the additional capital required, but small and medium enterprises would find it difficult to cope with the decision. This, at a time when there is an overall credit crunch in the economy.
There is no doubt that India is in the middle of an economic slowdown. Given this, shouldn’t the policy-makers take cognisance of the downturn? Even if scrapping single-use plastics items is a good thing, is this the right time to do it?
This brings us back to the question of the timing of the implementation the ban. While Union Environment Minister Prakash Javadekar has indicated that there is no imminent ban on single-use plastics, Union Consumer Affairs Minister Ram Vilas Paswan said in a recent interview that the ban will be implemented “in a phased manner”. Either way, we are none the wiser.
However, for the stakeholders it is important to know what plastic item will be banned and when. As suggested by the All India Plastics Manufacturers Association, which has 2,000 direct and 20,000 indirect members, there should be a clear scientific definition of the term ‘single-use plastic’. The industry feels that experts and institutions should be approached to get an unbiased view on the subject. It has also suggested that any new policy should take into account the lifecycle, environmental, social and economic impact of the product against the alternative product.
Therefore, the government needs to sit with the industry and find a way forward so as to ensure that a right intent does not backfire because of a wrong method of implementation.Abhijit Kumar Dutta is a freelance writer. Views are personal.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.