Page 9 - Plastics News March 2022

Global Turbulence Affecting The Indian Industry

India and the United Arab Emirates (UAE) has recently signed a free trade pact the comprehensive
economic partnership agreement (CEPA) that is expected to almost double two-way trade to
$100 billion in the next five years. The two sides issued a joint vision statement that outlined
the future course of relations and highlighted areas of focus, including enhanced maritime
cooperation and joint steps to fight terrorism and measures to boost trade and investment.

As far as our Plastics sector is concerned, it is projected that preferential access of Indian plastic
products to the UAE market will lead to additional exports to the tune of $1.3 billion. Additional
increase in exports is projected at $872 million in the short term and another $402 million in
the long term. During 2020-21, India exported plastics worth $418 million to the UAE. Tariff
concessions offered to the UAE by India in products like polyethylene and polypropylene will
reduce import costs of inputs for domestic industries. In automobiles as well, the projected
increase in exports over the five-year horizon is $160 million.

On the other hand the fifth session of the United Nations Environment Assembly (UNEA-
5.2) was held in Nairobi earlier in the month. Heads of State, environment ministers and
other representatives from 175 nations, endorsed a historic resolution at the three-day UN
Environment Assembly UNEA-5.2, to end plastic pollution, and forge an international legally
binding agreement, by the end of 2024.The landmark resolution addresses the full lifecycle of
plastic, including its production, design and disposal. Japan and India presented their draft
resolutions before UNEA 5.2, while Japan was rooting for a treaty focusing solely on marine
litter India had proposed a voluntary approach rather than a legally binding one. The term
“voluntary” was retained in the final text on India’s insistence.

While the CEPA and UNEA are good things to happen the ongoing Ukraine –Russia war has
been one of the unfortunate things to have happened. With over a fortnight now and no sign of
early solutions, one wishes to have the cease fire at the earliest for the betterment of the world.

The impact of the war is seen to be felt in far reaching Indian Markets as well and with the rising
prices of crude oil and Natural gas the energy equilibrium is going for the toss, thanks to the
supply disruptions! The cascading effect is for everyone to see in the domestic market. Margins
of the primary polymer producers have come under stress and as a result there is a increase in
polymer prices up to 50 percent in some cases however, primary producers might differ in their
respective pricing strategy. Also with the rapid change in business dynamic, as it happens ,
processors have to make cash payment upfront for raw materials as compared to the otherwise
‘normal three weeks Credit’ payment.

Let’s hope for an early respite from the global turbulence.

9 PLASTICS NEWS March 2022