Plastic manufacturers in Gujarat have been in a catch-22 situation as prices of raw materials including granules are increasing but their customers are not willing to pay more. Even in the export front, Ukraine-Russia war is impacting adversely amid inflated freight charges. Since the outbreak of Covid-19 pandemic suppliers of raw materials have increased prices up to 14%. Though prices started decreasing due to continuous decline in Covid-19 cases not only in India but across the globe, but after the invasion of Russia on Ukraine once again raw material prices started escalating, said Shailesh Patel, immediate past president of Gujarat State Plastic Manufacturers Association (GSPMA).
Since the outbreak of Russia-Ukraine war, prices of raw materials escalated at least by 10%, said Patel, adding that if the situation wouldn’t improve in near future, there would be further escalation not only in raw material prices but across all inputs including fuel and transportation charges.
Exporters of plastic goods are in complete mess due to unavailability of containers and increased freight rates. Some of the Gujarat-based exporters who had taken orders from Canada before the start of war are facing challenge as the freight rate to send consignment to Canada inflated from $300 to $1,100, he added.
“In this volatile market, suppliers of plastic raw materials are implementing price hike in proportion of global rates. Plastic manufacturers have no option but to buy raw material from them at higher prices, but their buyers are not willing to pay more as orders were taken well in advance,” he lamented, adding that forget private sector customers, even governments are not considering increased price of raw material and stick to prices quoted by supplier during tendering process.
With over 10,000 plastic units and annual turnover of more than Rs 40,000 crore Gujarat is having more than 25% share in India’s plastic industry. Of the total units, over 70% are MSMEs.Plastic industry in Gujarat providing employment to nearly 15 lakh people.
The suppliers of raw materials to plastic processors are handful. Forget private players PSUs including Indian Oil Corporation (IOC), GAIL India Limited, Bharat Petroleum Corporation Limited (BPCL). ONGC Petro additions Limited (OPaL) and others too have increased the prices of plastic raw materials.
