All India Plastic Manufacturers' Association (Aipma) president Arvind Mehta spoke on various related issues to The Financial Express. Excerpts.

On reasons for recent price hike by polymer makers and impact on plastic makers

The hike in crude petroleum prices in the international market has forced the downstream products manufacturers to hike their prices. Given the increased demand for petroproducts in the ensuing winter season in the western world upto January 2000, the prices for polymers are likely to rise further during the next couple of months.

In a competitive world, these frequent price hikes by polymer makers hits the plastic makers hard, moreso if they are not announced in advance. This is because we are unable to pass on the price hike to our customers and have to bear the losses. Under such circumstances we even lose our customers.

On quantum of price hike and how frequent are the price hikes

The polymer makers have twice hiked their prices last month in a span of 15 days. Further they have raised the prices once again on Friday last.

Accordingly, the prices of various polymers have risen by around 20-28 per cent on an average from the levels in August last. ABS prices however, has jumped by over 33 per cent from its previous levels.

Specifically, over the last two months, LDPE prices were up by 28.95 per cent; LlDPE (22.04 per cent); HDPE (24.50 per cent); PP (21.45 per cent); PVC (21.03 per cent); PS (22.33 per cent); HIPS (23.71 per cent) and SAN (24 per cent).

On possible price trends in India after December

While the upward price trend is likely to continue till January 2000, polymer prices in India are likely todecline after January 2000 mainly because of the surplus refining capacities that will emerge after Haldia plant goes on stream by end-November. Even GAIL's plant, which went on stream recently, would add to the total refining capacities in the country.

On impact of import duty on the industry

The domestic plastic industry is reliant on import of polymers, which attracts a high duty of around 35 per cent, countervailing duty of 24 per cent and an additional four per cent (of the total cost based on these two duties). This duty structure renders the industry uncompetitive. The industry can not run on 50 per cent protection to raw material manufacturers, that too at the cost of processors.

We have requested the government to reduce the basic duty to 20 per cent (from current 35 per cent) to help the industry to become competitive. With higher international polymer prices, the government will hardly loose but will help the manufacturers survive in a competitive market.

On impact of highpolymer prices in neighboring countries

There is hardly any impact of increased polymer prices on the plastic makers in the South East Asian countries. This is because unlike Indian plastic manufacturers, the focus of the plastic makers in the neighbouring region is exports. India's imports of polymers is mainly for its domestic consumption and very little for the exports.

Further, these countries have low import duty and local levies, and to top this, the respective governments extend support to the exporting industry which results in negligible impact on higher prices.

On views about the plastic makers in the small scale sector, after liberalisation

There has been drastic changes after liberalisation and upgradation of the SSI facilities. The threshold limit for SSI units too has gone up, all of which encourages the small players in the industry to grow faster than ever before.

On impact of WTO agreement on the domestic plastic industry

The actual impact of the WTO agreement onthe industry are unclear currently, primarily because the government has not declared its stand at this point of time and is not clear about the various possibilities of the WTO. The next meeting of all WTO members is scheduled to meet in November this year, and thereafter only the actual impact will be slightly clear.

However, with uniform duty structure to be in place after the WTO agreement is adopted after 2002-3, there is likely to be dumping of polymers by global multinational corporations. With our own refining capacities in excess of local demand, we expect domestic supplies of polymers to be sufficient. Therefore, it is important for the government to consider strict levy of anti dumping duty to safeguard local refiners and the supply of polymers from the domestic manufacturers.

On the level of domestic consumption of the plastics

Currently, India's per capita plastic consumption is around 1.8 kg, a small percentage compared to the world average of 17 kg where the US tops the list at 85kg per capita plastic consumption.

The association plans to double the per capita plastic consumption to around 3.6 per cent by 2002 by introducing newer varieties of the plastic products which is more useful to the consumers.

On Maharashtra government's drive to ban use of polybags

T he Association has already approached the Maharashtra government 3 years ago with the suggestion that those polyethelene bags of below 20 microns (thickness of the bags) should be banned. Currently, polybags are of only three microns, which can't be recycled.

It is important to note that all varieties of plastics are recyclable and reusable, provided they are of high microns. Rag-pickers who normally picked up the poly bags from the roads and garbage sell to it to the processor who recycle the same. By banning the use of polybags the government is trying to stop the small manufacturers from growing. Why should the entrepreneur in the small scales pay penalty for the government's whims and fancy? The governmentneeds to improve its waste collecting and management system and not ban the use of polybags.

On other demands from the government for the industry

Among other things, there should an uniform sales tax throughout India.