Single use plastic ban: Substitutes revving up to seize opportunity

Cotton and jute are both vying for space in the domestic market after making global inroads; business goes beyond carry bags to embrace earbuds, thermacol, kitchenware, among others

Opportunity came knocking for Jagdish Bhatia when Prime Minister Narendra Modi gave a clarion call for phasing out of single-use plastic in his Independence Day address in 2019. He went on to set up No Plastic Shop, an eco-friendly product selling website primarily focused on cotton bags for wholesale and retail.

Then Covid struck and cotton prices soared, impacting business. But the past 10 months have been good with enquiries coming in from corporations with the restarting of conferences and the Plastic Waste Management Amendment Rules, 2021 in effect. Bhatia is now looking forward to a 200 per cent jump in sales in FY23.

The Plastic Waste Management Amendment Rules, 2021, prohibited manufacture, import, stocking, distribution, sale and use of plastic carry bags having thickness less than 75 microns with effect from September 30, 2021. Now, from December 31, 2022, the standard will increase to 120 microns, and cotton and jute bag manufacturers are gearing up for the opportunity.

Also Read | Single-use plastic ban comes into effect: List of banned daily-use items

Bhatia’s supplier, Sekawati Impex, is one of the largest manufacturers of cotton bags but largely catering to the export market.

“We are planning a big entry in the domestic market soon and we are chalking out a strategy. Right now, we are not doing big volumes in the domestic market. But we will be targeting large corporates and retail chains,” Dinesh Gupta, president, Sekawati, said.

Sekawati Impex was set up in 1991 and supplies to the US, Canada, UK and Japan. In the last five years, it has doubled production from 5 million bags to 10 million.

Cotton’s more expensive substitute, jute is also vying for space in the domestic market after making major inroads in the export market.

The Indian Jute Mills Association (IJMA) has made presentations to the ministry of textiles and ministry of consumer affairs. “We are proposing to the ministry to run a pan-India campaign, Bring Your Own Bag (BYOB). There can be a tripartite arrangement with top retailers, jute industry and the government of India for introduction of jute bags and promoting a culture amongst customers,” Raghav Gupta, chairman IJMA, said.

The BYOB campaign is akin to what global retailers like Tesco have been doing for some years. Discussions around the campaign between the jute industry and the government first started in 2019 but didn't progress. Now, a fresh pitch is being made.

The opportunity for plastic substitutes however is not limited to the carry bag space. A list of items – earbuds with plastic sticks, plastic sticks for balloons, plastic flags, candy sticks, ice-cream sticks, polystyrene (thermocol) for decoration, plastic plates, cups, glasses, cutlery such as forks, spoons, knives, straw, trays, wrapping or packaging films around sweet boxes, invitation cards, cigarette packets, plastic or PVC banners less than 100 micron, stirrers – have been banned effective July 1, 2022. And that has opened up possibilities even for large players like the diversified conglomerate, ITC.

ITC’s paperboards division had been gearing up for plastic substitutes for a while now with its packaging solutions for quick service restaurants, personal care and packaged foods industries. Sources indicated that while exports have been big, demand in the domestic market was picking up.

Export boom

The demand for plastic substitutes in India is still at a nascent stage. But countries across the world have been moving to beat plastic pollution for a while now and – whether its cotton, jute or value added paperboard – Indian players are making the most of it.

Consider this: data from IJMA showed, exports of jute hand bags/shopping bags in 2015-2016 stood at Rs 321.61 crore to Rs 820.36 crore in 2021-2022; in terms of quantity, it moved from around 47 million bags to 104 million bags during the period.

For jute mills – once considered a sunset industry – it’s given a fresh lease of life with major foreign retailers like Tesco, Muji, Lidl, Aldi, Asda sourcing bags from India.

To meet the demand, mills are adding capacity. “Last year, we exported 2.7 million bags and this year, I am confident of touching 5 million bags,” G R Verma, president, Birla Jute Mills, a unit of Birla Corporation. Birla Corporation supplies to Europe, the US, China and Japan.

Gloster is setting up a mill –the last new one to come up in the organized space was possibly decades back.

“We decided on a new mill because we were forced to give up on export orders. Globally, there has been a clear trend of shift from plastics wherever commercially viable,” said Hemant Bangur, executive chairman, Gloster. The new mill – which would be fully operational in three years – would increase capacity from 50,000 tonnes to 80,000 tonnes.

In cotton bags, Sekawati Impex, plans to double production in the next two years to cash in on the rising demand.

Price factor

While India is expected to see a boom in the use of alternatives to plastics, pricing could be a stumbling block.

“In terms of pricing, paper is the next cheapest option as compared to plastic packaging, with glass priced higher than the majority of the options. Jute and cotton are still priced higher than paper and hence preferred less as compared to paper in most cases,” Pushan Sharma, Director, Crisil Research, said.

Birla Jute’s Verma pointed out that in the overseas market, penetration of jute bags had increased like anything. “A similar thing should happen in India. But if it doesn’t, the only reason would be cost.”