Paper fails to bag opportunity from plastic ban in city

MUMBAI: With the state ban on poly bags after the Mumbai floods, there was a faint hope of revival for the paper bag making cottage industry. But, however, a closer look shows that there has been no such revival. Before the ban, the aggregate demand for paper bags was roughly around 8-10 lakh units a month.

Things haven’t changed much and demand has moved up marginally — to around 10-12 lakh units a month. Devendra Chedda, partner, EuroWorld, a paper bag manufacturing unit, says, “The ban has led to a 15%-20% rise in sales. But compared to the total demand, this is insignificant,” he says.

So, if the ban is still in place and the paper bags industry has not gained much, then how are people coping with the situation. Simple: they have switched to thicker plastic bags.

Gibson G Vedamani, CEO, Retailers Association of India (RAI), says, ”If the paper bag manufacturing industry comes up with a viable, cheaper alternative, then the lower end retailers would be only too happy to switch.”

Ajay Desai, president, All India Plastic Manufacturers Association, says, ”Consumers do not prefer paper bags because they are not handy and have a short life. On the other hand vendors can’t afford to cut into their margins because paper bags are more costly. Thus it is practically impossible to rout the poly bags from the market.”

Bags made of out of paper also have practical drawbacks which hinder their usage. The average newspaper bag has a manufacturing cost in the range of 50 paisa to Rs 2. While the cost of a poly bag is around 30 paisa. Thus in terms of economies the vendor obviously uses the cheaper option.

Last year when the ban was announced, RAI had demanded a ban only on poly bags below 20 microns. “Low-end retailers work on very stringent margins and thus using expensive packing with paper bags would not be economically viable,” says Mr Vedamani.

Of the total cost of making a newsprint bag, 25-30% accounts for labour, while the rest is materials, overheads and profits. A worker earns roughly between 15 paisa-60 paisa per bag. Mr Chedda, says, ”These are very poor families and the entire supply chain is so unorganised and dispersed.”

These households could never match the pace with which the poly bag is replacing the paper bag market. Kurla resident Abhijeet who used to make paper bags earlier, says ,”I stopped because work was erratic and there was hardly any demand.”