Parle Agro, Dabur, Amul seek more time as July 1 plastic straw ban looms

“India doesn't have sufficient capacity to produce industry's requirement. As an industry we can't keep importing because the costs are 500% more than what we've been paying. Apart from importing, there are shipping challenges, there's a complete supply chain disruption. Logistics costs are also 5x more now and importing straws cannot be a solution to this. Six months’ time would allow the industry to set up infra here in India, build required capacity,” Schauna Chauhan, CEO, Parle Agro told CNBC-TV18.

The July 1 ban on straws is part of the government’s August 13, 2021 notification, where it prohibited the manufacture, import, stocking, distribution, sale and use of various single-use plastic products from July 1.

The list includes ear buds with plastic sticks, plastic sticks for balloons, plastic flags, candy sticks, ice-cream sticks, polystyrene

No alternatives, heavy losses

Makers of these tetra pack beverages that use the straws claim that there are little to no alternatives present in the Indian market right now, so the ban is set to cause massive disruption. The reason is that around six billion plastic straws attached to small beverage packs of Frooti, Maaza, Real juices, Amul buttermilk, among others, are sold annually in India, and these will have go off the shelves.

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As per industry players, small tetra packs make up about 40-60 percent of their beverage portfolios. While the number for Parle Agro, which sells Frooti, Smoodh, etc, stands at 40 percent, Amul sells about 15-20 lakh straws daily attached to its products like lassi and buttermilk.

Companies like Amul, Parle Agro and the Action Alliance for Recycling Beverage Cartons (AARC), an industry body that represents 70 percent of the beverage industry, have written to the government seeking more time as there is not enough supply available currently for alternatives to plastic straws.

R.S. Sodhi, MD of GCMMF (Amul) said the company is ready to import straws if required despite it costing 5-7x more, but supply isn’t available.

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“When we went out to buy, we couldn't get a supplier in India to make such straws made out of imported paper. We also approached foreign suppliers, but they're also taking time. Even if we wish to pay 5-7x more price for paper straws, supply is not there. We're requesting the government for time of maybe around one year so we can import straw-making machinery, install and make our own straw or the industry can make it,” Sodhi said.

Praveen Aggarwal, CEO of AARC also pointed out that the quick service industry has been able to largely transition to paper straws because those  thicker straws (8mm in diameter) are made in India using food grade paper and gum. But for these smaller straws (3mm in diameter), there is no technical competence or machinery available in the country in this point of time.

“So we are required to import such machinery from two or three countries which manufacture that. But since European countries too are in transition period towards paper straws, the availability of machines is very, very limited. There is a waiting period of one to two years,” he added.

Transition plan

AARC has presented a six-quarter transition plan to the government to move to alternative straws.

“This transition plan should not be treated as an extension of the ban. We are not saying that after 18 months, we will start replacing the integrated plastic straws. From the first there'll be a graded increase in the replacement. So in the first quarter, we will start with 15-20% straws, which may be different. Then quarter to quarter we'll take it to 40, 60 and 80 percent. And in the sixth quarter, we are sure that all current plastic straws would be replaced either by domestically manufactured paper straws, imported paper straws, or compostable plastic straws,” Aggarwal says.

Tough road ahead

AARC has also raised concerns on what would happen to the existing stock with retailers.

“Millions of packs would be there with millions of retailers and stockists across the country. And it will be very, very difficult to retrieve those packs, which will cause not only acute hardship to these retailers and distributors, but also cause loss to the industry running into several 100 crores of rupees,” Aggarwal added.

Meanwhile, companies like Parle Agro are trying to find vendors to develop local manufacturing capabilities by importing machines. The industry is also working on compostable plastic straws. But the regulatory process itself could take a minimum of 9-12 months.

With the government already refusing to relax the ban on plastic straws once in the past, with less than one month left for the ban to be implemented, time is running out for the industry faced with a massive disruption of their fastest-selling products.