The Hindu : Tamil Nadu News : Plea to ease rise in price of plastic raw materials

Online edition of India's National Newspaper
Sunday, May 02, 2004

Tamil Nadu

Tamil Nadu

Plea to ease rise in price of plastic raw materials

By Our Special Correspondent

CHENNAI, MAY 1. The Chennai Plastics Manufacturers and Merchants Association has appealed to the Central and State governments to mitigate the sharp and frequent rise in the price of plastic raw materials caused by the "monopoly hold" on the market by sources of supply.

Addressing a press conference here on Wednesday, G. Sankaran, president, urged the Union government to implement the assurance it gave in Parliament at the time of privatisation of IPCL (Indian Petrochemicals Corporation Ltd) that a price regulatory body would be set up to forestall artificial scarcity of plastic raw materials as a result of the disinvestment in favour of Reliance, itself a leading player in the polymer industry.

Citing figures for increase in the prices charged by the main supplier and, in the case of some items, the lone supplier, Mr. Sankaran said the threat to the survival of thousands of small and tiny manufacturers was a result of the National Democratic Alliance Government acting against the Disinvestment Commission's advice that "under no circumstances should any public sector undertaking be transferred to any monopoly buyer."

Mr. Sankaran said plastics processors in Tamil Nadu were particularly disadvantaged by their distant location from the source of supply, which not only resulted in a transportation cost of Rs. 3 a kg but also non-availability of the material as stocks were often disposed of near the supply source in times of good demand. The Centre should reduce the import duty on plastic raw material from 25 to five per cent and the excise duty from 16 to eight per cent, as had been done recently for steel. Raw material producing companies should be persuaded to set up warehouses in consuming centres. The Tamil Nadu Government's failure to extend the setoff facility for entry tax to manufacturers as distinct from traders affected plastics units which had to bring raw material from outside. "There is no manufacturer of plastic raw materials in the entire south India and Tamil Nadu at the land's end faces a particular disadvantage," he said. Government undertakings and agencies purchasing plastic articles through open tenders should allow variation in rates of supplies linked to raw material prices.

A.S. Kannan, president of the Tamil Nadu Cottage and Tiny Industries Association and MLA, said the Small Industries Development Corporation stopped procurement of raw materials for supply to SSIs in the wake of poor offtake in the past. High prices and non-availability of raw material accentuated the crisis faced by the SSI sector following denial of bank credit at affordable rates and the high cost of power.

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