This is primarily because of the favourable trade agreement under the general exemption no 57 and 58 under sub section (1) of the section 25 of the Customs Act 1962 and the first schedule to the Customs Tariff Act 1975.

Chinese goods are known to be cheaper by around 60 per cent. Even the plastic goods coming from Nepal are said to be cheaper by around 55 per cent, because of the general exemption under which the Nepalese producers can export goods at a low import duty of around 16 per cent. Compared to the 71 per cent overall levies payable by the Indian producers, both Chinese and the Nepalese goods are playing havoc in the domestic plastic goods markets.

According to All India Plastics Manufacture`s Association (AIPMA), president, Arvind Mehta said: ``The domestic plastic goods industry is squeezed from two sides: One, for the past seven month the continous increase in the polymers prices was putting pressure on the domestic SSI industry and now the flood of cheap goods from both China and Nepal Currently, plastics goods are flooding in eastern India and gradually it will spread out in the entire country. It is therefore, necessary for the Indian government to uplift the domestic SSI sector by reducing various duties and taxes. If not, the industry has no choice other than to shutdown or perish". In eastern India like Delhi, Patna markets are flooded with Nepalese goods. And due to this around 30 per cent of this zone's plastic SSI has totally shutdown in the last few months.

AIPMA feels the custom duty structure under code 39 need to be different for both raw material and the finished goods. Currrently, under this code 39 plastic raw material and finished goods are treated as only one item and 35 per cent levy duty accordingly. Accordingly, AIPMA feels the custom duty on raw material import should be around 20 per cent and finished goods duty should be around 40 per cent.

``If implemented these changes can give the plastic units in the SSI sector a breather'', said Mr Mehta. ``Also, there would be substantial jump in the plastic goods exports to around Rs 3,000 crore from the current level of around Rs 1,900 crore.

Plastic raw material is available in plenty, that is positive situation and currently polymers prices is on a downtrend around 6-12 per cent. Neither domestic plastic processor nor raw material producers honour their contract of buying and selling of Raw-material. When price go down, processors backs out and when prices go up raw material people back out. This is the worst situation and maturity is lacking on both sides.