The nascent ban on plastic bags has hit an unlikely roadblock to success — the economic recession.
Battling with a severe liquidity crunch and shrinking clientele over the past year, the makers of jute and paper bags in Delhi are in no position to augment production anytime soon and meet the huge demand for their products generated by the ban.
“Slump in the market prevents us from affording long-term risks. Earlier, we worked with a stock for six months but now we keep stock for about a week. We would take months to generate resources and increase capacity,” said Raghavendra Sharma, founder of Bagsmith, one of the country’s largest makers of paper bags.
“Banks are in no mood for exposure to long-term risks so sourcing working capital for capacity augmentation is nearly impossible now,” said R.K. Jain, of RK Graphics, paper bag manufacturer at Okhla Industrial Area.
According to estimates prepared by manufacturers of plastic bags, Delhi uses up 10 lakh plastic bags every day, while as per traders, the number touches 20 lakh a day. In any case, the output of all the non-plastic bag makers combined is only around 1-2 lakh per day, claims a study by the Confederation of All India Traders (CAIT) released Thursday.
“The shortfall is easily over 10 lakh, and cannot be filled in a hurry,” said Praveen Khandelwal of secretary general of CAIT.
Over the past year, corporate clients of the eco-friendly bags too have reduced considerably.
Companies and institutions bought stationary items and bags made of paper and jute in bulk. But that has changed because these items cost more than their regular counterparts.
“Companies are cutting costs. So their budget for these items have decreased,” said Sameer Gora, head of TARA, makers of handmade paper bags and stationary.
“There were very few inquiries for bulk gift items like diaries and fancy bags for New Year,” he added.
Jute bag manufacturers, like Adhaar, estimates that the absence of plastic bags would bring in a business worth 5,000 bags a day from its present 500.
“The ban has come at a time when we are down on resources. So we can see potential business but cannot reach out and grab it,” said Arun Kumar, the executive secretary.