Encourage large investments in the petrochemical sector: Supreme Ind MD Taparia

The Budget bet this time hovers around higher public spending and reviving the investment cycle. While many sectors are plagued by excess capacity, the plastic industry is in dire need of capacity addition.

Speaking to Bloomberg TV India , Supreme Industries Managing Director MP Taparia says India must build large-scale polymer units to meet rising domestic demand. Any growth model based on increasing import volume is unsustainable, he says.

What’s your expectation from the Budget for the plastic industry?

Plastic product makers are greatly encouraged by the Prime Minister’s clarion call of ‘Make in India’. We expect policy measures in the Budget on four lines. One, the surge of plastic product imports is hurting the country and industry in a big way: such imports are substantially under-invoiced, and erodes the competitive edge of local producers, apart from the huge revenue leakage. We expect the Budget to announce suitable mechanism to cut legal smuggling.

Secondly, the industry has huge potential for global plastic trade. In 2015, China exported $103 billion of plastic products, whereas India exported less than $4.5 billion. Even South Korea’s plastic exports are more than $15 billion. The industry believes current policy measures are inadequate to boost exports significantly. Plastic products manufacturing is labour intensive. Unless suitable policy measures are in place to encourage setting up of large units employing thousands of workers close to sea ports, this potential will remain untapped. Such policy direction will not only create large number of jobs but will also boost exports.

Thirdly, the consumption of plastic raw materials is now growing at a pace in excess of 1.5 million tonne annually. To sustain such growth, large-scale polymer making capacity is required to be set up. No major capacity is coming up beyond 2017. Such capacity requires 4-5 years to fructify. Firm policy measures are required for boosting investment in large polymer making capacity. Otherwise industry will become completely dependent on imports for sustaining growth. Any growth based only on increasing import volume is unsustainable.

What steps do you seek from the government?

The government has to encourage large investment for petrochemical plants in India. Otherwise, the growth will be only dependent on the import of plastic raw material. And with fall in global oil prices, it will be profitable to set up such large plants. But the government has to come up with policy measures to boost local production.