Mumbai: Plastic exports are expected to be subdued during this financial year at around USD 8.2-8.5 billion following the US decision to revoke Generalised System of Preferences (GSP) benefits to Indian goods, according to a report.
India had exported USD 8 billion worth of plastics during in FY19, making it the 17th largest plastic exporter in the world and exported out of a global market of USD 600 billion, according to a report by US-based trade finance company Drip Capital.
"The exports were affected due to shocks to the export ecosystem, like the removal of the GSP by the US and increasing global concerns about the environmental impact of plastic. Recently the exports have begun picking up after the Centre announced fiscal measures. Even as the exports are picking up it will remain subdued at USD 8.2-8.5 billion in FY20," Drip Capital co-founder and co-CEO Pushkar Mukewar told PTI here.
Policy interventions and market diversification offer solutions for exporters and can help the sector achieve stability and regain growth in the long-term, he added.
With Indian stakeholders are targeting plastic exports worth USD 25 billion by 2024-25, there is a need to tap other lucrative markets.
Several other markets, including Southeast Asia, Africa and Latin America can be tapped and diversifying to these regions would be the best solution for Indian exporters, the report said.
In Southeast Asia Bangladesh, Japan and Malaysia have shown high growth in plastic imports over the years, since China stopped importing plastic waste in 2017.
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However, these markets are also feeling the environmental impact of plastic waste and taking steps to minimize it, hence, exporters would be wise to tap these regions while opportunities remain, it added.
Opportunities are also provided by the US-China trade war, which could offset this setback, he opined.
Meanwhile, in India, Gujarat dominates the exports due to its industry-friendly policies like low power rates, however, other top exporting states like Maharashtra witnessed slow down, leading to fears of stagnation in the sector.
Gujarat and Maharashtra currently contribute 60 per cent of all of India's plastic exports, however, while Gujarat's exports have grown 15 per cent year-on-year in the last four years, Maharashtra's volumes have stagnated.
Other exporting territories include Madhya Pradesh and West Bengal and the Union Territories of Daman and Diu and Dadra and Nagar Haveli.
Almost 65 per cent of these exports come from MSMEs, who constitute 90 per cent of all plastic exporters in India.
These territories ship plastic to the US and China, long-term importers that have also shown promising growth in the last couple of years.
The Middle East and Europe are also major importers of Indian plastic and plastic products, but these markets have been in decline in recent years, it added.
