New quality standard for polyethylene will hurt domestic producers: PLEXCONCIL’s Arvind Goenka

Ease of Doing Business for MSMEs: The Indian government has set a new quality standard for the domestic producers of polyethylene to adhere to.

Department of Chemicals and Petrochemicals under the Ministry of Chemicals and Fertilizers issued an order dated April 15, 2021 that makes it mandatory for petrochemical producers of certain kinds of polymers to meet the new criteria set by Bureau of Indian Standards (BIS).

The order is applicable to three kinds of polyethylene material, the raw material used for making various plastic products: low-density polyethylene (LDPE) (widely used to make grocery bags and packaging material); linear low-density polyethylene (LLDPE) (used in making stronger bags, toys, buckets, pipes) and high-density polyethylene (HDPE) (jugs, plastic bottles, mugs, shampoo bottles).

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The new standard titled “Specification of Polyethylene Material for Moulding and Extrusion” is labelled under Indian standard IS 7328:2020.

The industry is of the opinion that meeting these standards is not an issue and manufacturers have the technical know-how and infrastructure but the Order will fail to meet its purpose.

Arvind Goenka, Chairman of trade body for plastic exporters Plastics Export Promotion Council (PLEXCONCIL) told Financial Express Online that the rationale of the order was to curb imports and improve the quality of plastic products in the country.

But, this Order will accomplish neither goal. He explained, “Setting the quality standards on the raw materials would still allow cheap quality plastic finished goods to be imported into the country.” In fact, the additional compliance will increase the cost of domestically produced polyethylene and as a result of the finished products putting domestic manufactures at a disadvantage over importers, he said.

Plus, the raw material in itself doesn’t ensure that the finished product will be of the desired quality. It depends on several other factors such as additives used and even the process of manufacturing.

There is also a requirement for overseas importers to obtain a licence to ensure that their product conforms to the new standards imposed by the BIS. It should be noted that India is a net importer of these products and the additional compliance might dissuade many suppliers to export to India. “India already faces a shortage of these products and the Order might dissuade many exporters in the US and the Gulf countries, especially the smaller players, to send their products to India,” said Goenka.

He added, “The government should perhaps have started with other raw materials such as Polypropylene (PP) where India is self-sufficient and gradually expand to other products.”

This order will be enforced after 180 dates from the date of publication of the official gazette. It is only applicable for domestic petrochemical manufacturers and not Indian exporters.