The Impact of the Single-Use Plastic Ban on the Paper Industry and Businesses
Published on : Thursday 17-11-2022
Guruprasad Bangle reviews the positive and negative effects of the ban on SUP.
Single-use plastic (SUP) was outlawed on July 1, 2022, and the country witnessed conflicting reactions from stakeholders, including environmentalists and businesspeople, among others. This is undoubtedly a good move from the perspective of environmental protection and will go a long way toward protecting our environment from the threat of plastic. However, depending on where a company stands on the spectrum in terms of its products and services, the impact of this policy choice on that company may be favourable or detrimental.
Paper industry: a growing sector
It makes sense that the SUP ban would help the businesses that make alternatives to plastic, with the paper industry at the top of the list. The increase in their stock prices makes it very clear that the businesses that produce papers and related packaging materials have benefited. Consider Seshasayee Paper and Boards, a well-known paper manufacturer with headquarters in Tamil Nadu. Since June 30, the company's stock has increased by 7%, and shares of Andhra Paper and Satia Industries have also increased at a comparable rate.
Which categories are banned?
Flags, trays, invitation cards, PVC banners, earphones, and other items fall under the main categories for which SUP has been outlawed. Additionally, the government has outlawed the use of SUP in items with a high potential for littering, such as wrapping paper, cups, glasses, forks, plates, and straws. The ban also extends to the plastic sticks found in candy, ice cream, and balloon flags. Given the vast array of categories covered by the prohibition, the paper sector has a once-in-a-lifetime chance to turn things around by providing alternate options to both industrial and retail customers.
Challenges Ahead
The potential market for the paper sector is, in theory, too profitable to be missed. The field is now completely open to benefit from the opportunity because policies and public opinion are favourable and the ban has opened it up. However, analysts draw attention to a significant flaw that can prevent the sector from seizing this chance. According to researchers, the majority of paper companies, including large corporations, do not produce any of the prohibited goods. Therefore, switching immediately from their current portfolio to new categories won't be easy. It's actually a significant issue, and given that the window of opportunity won't last for long, it's imperative that businesses act quickly to seize the chance before it vanishes.
Manufacturing consulting platforms can help stimulate paper industry
In such a challenging situation, the relevance of a process-based consulting platform comes into the picture. These forums are where industries and consultants come together and, in the process of exchanging ideas and solutions, also stimulate the growth of the manufacturing industry in the country. Paper manufacturers can connect on such a forum with the best consultants to reshape their business model to tap into opportunities arising from the ban on SUP.
Who stands to lose from the ban?
On the other hand, the SUP prohibition is putting thousands of micro, small, and medium enterprises (MSMEs) through financial distress. Businesses in the FMCG, packaged food, and healthcare sectors are particularly struggling. These industries use the most SUP to package their products, so with the ban in place, they are now looking for workable and, crucially, equally (if not more) cost-effective plastic substitutes. There is currently no cheaper alternative to SUP, and if there were, the cost of manufacturing many different types of products might go up. In turn, this will put pressure on producers to raise prices, which will force consumers to pay more for food, medications, and other essentials. Additionally, this might fuel inflation and further constrict the money supply, making it more challenging for MSMEs to secure funding to cover their operational and operating costs.
The ban on the use of SUP has many consequences, to sum up. While the paper industry is anticipated to prosper, MSMEs producing food, beverages, and healthcare items face some difficult times in the future.
Guruprasad Bangle, Co-founder & Chief Technology Officer, SolutionBuggy, has about 18 years of IT Consulting experience in US, UK and Italy in companies such as Accenture and IBM. He did his one-year full time executive MBA at IIM Bangalore and cofounded Properji – a real estate data analytics platform along with Priya Maheshwari. The company was acquired by MagicBricks in 2016 and post that Guruprasad joined SolutionBuggy as a Director in 2017.
