The Hindu : Tamil Nadu / Chennai News : Recycled plastic industry braces for tough times

Online edition of India's National Newspaper
Friday, Jun 09, 2006

Tamil Nadu

Tamil Nadu - Chennai

Recycled plastic industry braces for tough times

R.K. Radhakrishnan

"Many units will put up the shutters if Centre's excise duty plan comes through"

CHENNAI: Imagine hundreds of thousands of milk covers littering your street with no rag picker going near it. Imagine all the used plastic covers choking your storm-water drains... All this will not be in the realm of imagination if a tax proposal of the Union Government is implemented.

If the plan to levy 16 per cent excise duty and two per cent education cess on recycled plastics becomes a reality, none will bother to collect plastic scrap. Simply because recyclers will not buy it. "Only if the units exist can we buy," says Ramkumar, who operates a unit on the city outskirts. There are 600 plastic recycling units in the State. The Chennai Plastics Manufacturers & Merchant Association (CHEPMMA) says 60 units would come under the purview of excise duty, as they would be outside the exemption of Rs. 1 crore given to small-scale Industries. This will effectively stifle the growth of the industry.

Over 80 per cent of the scrap needed for the re-processing industry is sourced from rag pickers and small-time accumulators who do a house-to-house collection of used and damaged plastic scraps. Of the many kinds of waste scrap collected from garbage dumps and households, plastic scrap gets a sustainable price from the processors. If excise exemption granted for this plastic raw material is withdrawn, a substantial number of these units will put up the shutters, as many of the re-processors will not be able to continue business.

According to CHEPMMA president G. Sankaran, the proposal to levy excise duty on recycled plastic raw material will leave the plastic products manufacturers in jeopardy, since the cost of the final product will go up, and a majority of buyers could not afford these.

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