When the going gets tough, the tough ones get going. This famous quote from John F. Kennedy fits in perfectly with the Indian plastics recycling industry bill.
India’s plastics recycling industry is facing difficult times since the Union government banned single-use plastics and placed several other restrictions on its operation, including a mandatory environmental clearance prior to setting up scrap processing facilities. In addition, the government banned the import of plastic waste in 2019. However, some units in Special Economic Zones (SEZ) are allowed to import plastic waste for processing with mandatory permits from the State Immission Control Authority (PCB) and in compliance with strict local laws.
Plastic products made using scrap as a raw material are categorized as secondary plastics used for low tensile strength applications. However, novel plastics are being used for applications ubiquitous depending on their viability.
“But the import of plastic scrap has become difficult today due to the sharp rise in freight rates following the unavailability of empty containers. The plastic waste recycling business has gone nuts, ”said Chandrakant Turakhia, president of the All India Plastics Manufacturers Association (AIPMA), during an interview with Polymerupdate. According to Turakhia, the cost of importing plastic scrap has increased by 10 rupees / kg.
“The freight rate of a container with a capacity of 25 tons has increased fivefold from 500 US dollars in the days before Covid to now 2500 US dollars per ton. This has made the production of secondary plastics, which are made by recycling scrap, unprofitable, ”said Turakhia.
Indian plastics processors are largely dependent on imported scrap due to insufficient quantities from local sources. Despite several attempts to streamline local collection of scrap, the amount collected from local sources is insufficient to meet processing needs.
In fact, the amount of scrap generated is very small in India due to the low per capita consumption of virgin plastics. Experts estimate the per capita consumption of plastics in India at 13 kg compared to the global average of 30 kg and 100 kg in the USA alone.
Plastic waste is mostly imported from overseas in order to process it in local units, especially in special economic zones (SEZ). Indian processors have reduced their production capacities by up to 50 percent due to a lack of scrap and turned to local petrochemical companies to use new polymers as raw materials.
“We use pure polymer as raw material for the production of primary plastics and scrap for the production of secondary plastics. In view of the high freight rates for imported scrap, the production costs turn out to be the same when using both types of raw material. As a result, the margin arbitrage between secondary polymers obtained through processing scrap and virgin material has disappeared, making scrap processing unprofitable, ”Chintan Singhvi, Luckystar International Pvt Ltd., an importer and processor of plastic scrap, told Polymerupdate.
In fact, domestic polymer manufacturers have increased their product prices by 5-6 rupees per kg over the past two months, in line with similar price increases in international markets.
Editor: DILIP KUMAR JHA