High GST rates spell the end for plastic industry says the Association

Mangalore Today News Network

Mangaluru, June 05 2017: Daily necessities like packaging for food products, buckets, among others, are made by MSME units. 

‘Proposed rates enhance the tax burden by more than 10% from the present VAT’

The Canara Plastic Manufacturers’ Association (CPMTA) has said it is highly disappointed with the proposed GST rates of 18% and 28% on plastic products. It is more than a 10% jump from the present VAT rates of 5% to 14.5% as a result of which majority of Micro, Small and Medium Enterprises (MSME) manufacturers might have to close shutters, the association said. Higher rates are a big blow to the industry, said association president B.A. Nazeer in a release. He said the government had assured the industry that there will be no extra burden of tax in GST than currently being paid.

Plastic industry runs on very thin margins owing to highly competitive market largely owing to cheap imports from China. Today, MSMEs are exporting more than 30% of production in a highly competitive international market, particularly against China. Mr. Nazeer said plastic products serve the masses. Daily necessities like packaging of food products, house-ware, buckets, lunch boxes, pencil boxes, water bottles, toys, among others, are made by MSME. Most Plastic processors are MSME units and majority of them are not under the Excise Duty realm because of low turnover or being in the backward region. Considerable quantities of plastic products are presently sold with VAT at 5 % to 14.5 % for which GST is proposed at 18% and 28 %. Consequently, the products of necessity will become 10% more expensive under GST, he regretted.

The association has urged the government and the GST Council to reduce the rates to 12% for all plastic products.