Page 7 - Plastics News - April 2026

THE PRESIDENT SAYS

Greetings to All!

The Indian plastics industry today stands at a critical inflection point caught be-
tween policy intent and market reality. The recent decision by the Government of
India to reduce import duty on polymers from 7.5% to NIL was a bold and timely
intervention, aimed at providing relief to the downstream plastics processing sec-
tor, particularly MSMEs, during a period of heightened global volatility triggered
by geopolitical tensions in West Asia.

However, the on-ground situation has unfolded in a manner contrary to expecta-
tions.

While the duty reduction was intended to ease raw material costs, domestic poly-
mer prices have not witnessed a corresponding correction. Instead, what we are
witnessing is a structural distortion in pricing where domestic prices remain firm
despite lower import parity, and more concerning, prices for deemed export sup-
plies have seen a sharp increase. This inversion has created an uneven playing
field for Indian processors operating in global markets.

Data from early March to 3rd April 2026 indicates an unprecedented surge in
polymer prices ranging between 40% to over 60% across key grades. Such steep
increases, within a compressed time frame, are not only unsustainable but also
detrimental to the competitiveness of Indian plastic exporters. The increase of
`11,500–12,000 per metric tonne in polypropylene for deemed exports, immedi-
ately after duty reduction, is particularly alarming.

This situation highlights three structural concerns:

1. Breakdown of Import Parity Principle

Traditionally, domestic polymer pricing in India has been aligned with import par-
ity. With duties now reduced to zero, a natural correction in domestic prices was
anticipated. The absence of such a correction raises concerns about market rigid-
ity and pricing transparency.

2. Impact on MSME Converters

The plastics processing industry, largely driven by MSMEs, operates on thin mar-
gins. Elevated and unpredictable raw material costs directly erode profitability,
disrupt working capital cycles, and reduce export competitiveness. For many, this
is not just a cost issue—it is a survival challenge.

April 2026 PLASTICS NEWS 7