The limited ban will not impact the big players. The focus should be on moving away from the use-and-throw economy to one which is designed for reusable and sustainable packaging
Effective July 1, 2022, the Union government has banned identified single-use plastics (SUPs) as mandated by the Plastic Waste Management Rules, 2021. The stated aim of this ban is to arrest plastic pollution by targeting low-utility high-littering SUPs.
Going by industry estimates, this ban would target only two-three per cent of the total plastic produced. In fact, the bulk of the problem can be traced to the plastic packaging of fast-moving consumer goods (FMCGs), which include sachets and packaging of products like chips, biscuits, and soap which the ban conspicuously excludes.
The global movement, Break Free From Plastic, in its brand audit in India in 2021, found that 70 per cent of the 1,49,985 pieces of plastic audited were marked with a clear consumer brand. The audit found that much of the plastic pollution was caused by products from the top brands. Analysts at Kotak Institutional Equities, which has released a report on the ban, claim that the current ban will not affect the FMCGs, but the restrictions on sachets/pouches/wrappers/laminated tubes could impact their profitability.
In 2015, a report by FICCI and strategy consultants Strategy&, ‘Plastic Packaging – the sustainable and smarter choice: Why banning plastic packaging in Indian FMCG is not a viable option’, argued that banning FMCG packaging would affect the processed food industry to the tune of approximately Rs 90,000 crore per annum, amounting to 72 per cent of the industry.
The 2021 Rules treat SUPs generated by FMCG and non-FMCGs differently (except for the straws attached to packaged branded beverages). While there is a ban on non-FMCG SUPs, companies in the FMCG category have been allowed to go scot-free, since accountability measures like extended producer responsibility (EPR) are only introduced in a diluted form, allowing for the use of these toxic materials by paying a small fee and enabling a staggering transition over three years.
Plastic is a petrochemical. In India, it is produced from crude oil that is imported and then refined domestically. Therefore, the human, environment and climate costs are not limited to the disposal of plastics but extend to their life cycle. The FICCI report describes the backward linkage in plastic production which includes petroleum intermediate producers, resin and naphtha producers (both raw materials to plastic polymer), pre-packaging manufacturers, plant and machinery, mould and additive producers. A ban on FMCG packaging would have a significant impact on this entire chain. Perhaps this is where the untold story lies.
The limited ban on some SUPs will not impact the big players who will continue to produce for the non-FMCG category. Those significantly impacted would be some of the 30,000 MSME units that manufactured the plastic products on the banned list. This, of course, is no reason to not ban SUPs. But it is pertinent to note that there has been no government hand-holding of these MSMEs to enable them to transition into another industry. For example, 12 days into the ban, the Delhi Pollution Control Committee has issued closure notices to 14 units manufacturing the banned SUPs and within the first nine days, total penalties of Rs. 1.37 crore have been levied. The absence of alternative forms of livelihood and employment will undoubtedly contribute to the employment crisis in the country. Many of the identified SUPs which are banned are used by small eateries, other small enterprises and street vendors. This ban will, therefore, largely impact the MSME and informal sector, both on the production and use side, leading business to be taken away from the informal to the formal sector — a trend that was set in motion by demonetisation and the GST regime and got intensified as a result of the lockdowns during the pandemic.
If the government indeed wants to put its money where its mouth is, it should start by re-envisioning the retail system. The focus should be on moving away from the use-and-throw economy to one which is designed for reusable and sustainable packaging. Such a system should be geared towards the smaller players, the end user and, fundamentally, the environment and climate.
Datta is a research associate and Seshadri is the team lead, Oil and Gas Team at Centre for Financial Accountability