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Single-use plastic ban: ‘Very challenging for MSMEs to bear unexpected expenses; may get pushed into bankruptcy’

Sustainability for MSMEs: Though the government has recommended using biodegradable plastics, manufacturers say this will be unviable for them and expensive for end-users as biodegradables are largely imported and costly.

single use plastics
The ban should be implemented constructively and sustainably, keeping the interests of diverse stakeholders in mind. (Image: pixabay)

By Sandip Chhettri

Sustainability for MSMEs: While the ban on Single-Use plastic (SUP) is to safeguard the environment, it is understandable that alternative avenues are vital to sustaining the livelihood of employees in the affected MSME units. The plastic industry in India currently has a multitude of large-scale and small-scale units that provide employment to lakhs of people. As our ancient seers said, since human life represents a kaleidoscope of colours, it cannot be perceived in simplistic black-and-white terms.  

Accordingly, while the ban on single-use plastics (SUPs) was the need of the hour as far as environmental issues are concerned, one must also consider the overall impact on the second essential ‘E’ – economy. Therefore, a fine balance must be maintained between these two contrasting imperatives that influence human well-being. 

Given the global consequences of climate change, every initiative counts in mitigating its dangerous outcomes. Against this backdrop, one cannot deny that plastics are instrumental in accelerating the threat of global warming. Single-use plastics are especially harmful to the environment due to their high potential for littering and low utility. 

Ecological and Economic Concerns 

As per official data, around 3.5 million tons of plastic waste gets generated annually across India, which works out to 9,500 MT per day. Of this, only about 30% (2,876 MT) of plastic waste is recycled in the country while 70% (6,712 MT) ends up in the environment, which includes landfills and water. 

The ban on SUPs follows the Prime Minister’s clarion call to curb pollution arising from unmanaged and littered plastic waste across the country because of its impact on terrestrial and aquatic ecosystems. Consequently, with effect from 01 July, the Centre has banned the manufacture, stocking, distribution, import, sale and use of identified SUP products, pan-India. 

The list of 19 identified banned products includes plastic plates, glasses, cups, cutlery (spoons, forks, knives), trays, straws, candy and ice-cream sticks, earbuds and balloons with plastic, polystyrene or thermocol used for decoration, PVC or plastic banners of less than 10 microns and other items.  This ban will benefit the environment and, in turn, all living beings across the country. While the ban on SUPs is a most welcome measure, it represents only one side of the coin. 

On the other side of the prism is its widespread impact on the Indian economy. Among varied segments, the ban on SUP products will impact FMCG (fast-moving consumer goods), QSR (quick service restaurants), aviation and hospitality industries, not to mention hundreds of MSMEs. One can’t overlook the fact that the plastic industry currently has innumerable large- and small-scale units employing a million people, particularly in rural regions. 

For MSMEs running legitimate businesses, it is most challenging to bear unexpected expenses and many may be pushed into bankruptcy. Most MSMEs with a turnover of around Rs 1-5 crore have already invested approximately Rs 39,000 crore in their units. To save a million jobs, the authorities could consider measures to rehabilitate these units, facilitating their transition into other businesses. 

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For this, the ban should be implemented constructively and sustainably, keeping the interests of diverse stakeholders in mind. To safeguard the economic interests of MSMEs, a clear roadmap is required that facilitates a smooth transition of these entities to allied industries. Additionally, it is important to identify eco-friendly alternatives to SUPs. Though the government has recommended using biodegradable plastics, manufacturers say this will be unviable for them and expensive for end-users as biodegradables are largely imported and costly. 

Managing the Economic Implications 

Various industry bodies have voiced serious concerns over the economy and the resulting job losses from the ban. For example, AIPMA (All India Plastic Manufacturers Association) has stated that 88,000 units manufacturing SUPs could go bankrupt. Besides the workers employed here, these units contribute to exports valued at Rs 25,000 crore. Furthermore, the SUP industry is estimated to have an annual turnover exceeding Rs 60,000 crore. Since banks and other lenders have provided loans to thousands of SUP units, their closure will lead to a rise in NPAs (non-performing assets). 

The economic ramifications are also inflated by the cost of replacements. Disposable plastic cups used at tea stalls cost just 5 paise while its replacement, a clay kulhad, is priced at Re 1. Considering the price differentials, most replacements are slated to inflate costs by 100 per cent to 300 per cent. Eventually, the higher costs would be borne by consumers, stoking inflationary pressures. 

Significantly, multi-layered packages used by big global and domestic FMCG companies to pack coffee, chips, snacks and other consumables are exempted from the ban. Going by the immense employment and entrepreneurial opportunities that MSMEs offer the youth, it will be in the interests of everyone that these units are rehabilitated in other verticals. 

In this context, the Central Government has recently announced that MSMEs will be offered technical assistance through capacity-building workshops for manufacturing alternatives for banned SUP items with the involvement of official bodies. The workshops aim to help small enterprises transition away from banned SUPs. 

However, these measures must be accelerated to avoid undue hardships for workers employed in the affected MSME units. Ultimately, one hopes the authorities can promote practical alternatives that benefit all stakeholders while balancing concerns of both the environment and the economy.

Sandip Chhettri is the CEO of TradeIndia. Views expressed are the author’s own.

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