As a leading beverage player in the Indian market, Parle Agro has always invested in initiatives and projects with a keen focus on sustainability. This includes large-scale plastic recycling initiatives in partnership with national bodies to collect and recycle 100% of its PET bottle waste. While Parle Agro endorses the Government led to ban on the use of plastic straws, their plea is to postpone the implementation of the injunction by six months.
According to the press release, India produces and sells a total of 6 billion packs of paper-based beverage cartons with integrated plastic straws per annum. Presently the available capacity to provide a replacement of plastic straws with PLA straws or paper straws by a local Indian manufacturer is 1.3 million straws per day as opposed to the actual requirement of approximately 6 million straws per day. The hasty ban will negatively impact the industry and overall businesses of numerous players in the FMCG and beverage segment.
Packaging companies will need to invest in the right infrastructure to accommodate the changes which will require time to ensure the alternative is appropriate and cost-effective, especially during inflationary times. Currently, there is no local manufacturer who can accommodate the demand. Importing straws will be six to eight times more expensive making the cost of the product unaffordable, particularly products that are targeted at urban and rural markets. For Parle Agro, 50% of the company's turnover is from rural markets as their products are strategically priced to cater to consumers across every corner of India. The increase in the cost of the product will lead to a fall in demand and affect sales significantly. To replace the plastic straws, companies need 6 to 8 months, to make the necessary changes in technology, and sourcing and ensure a smooth transition to environment-friendly options of paper or PLA.
Schauna Chauhan, chief executive officer, Parle Agro, said, "We support the noble intention of the Government to ban the use of plastic straws. To implement the changes, we need a postponement of the ban by six months which will allow packaging companies in building the right infrastructure needed to source locally. Even getting approvals from regulatory bodies after appropriate testing to manufacture PLA straws will require time. While the transition process has already begun, the short deadline is a matter of great concern."
The percentage increase in cost from plastic to PLA is approximately 122% but if companies were to import the straws, the cost goes up by 259% and 278 % for PLA and paper straws respectively. Hence the industry will require time until local manufacturing capabilities are commercialized, all of which are currently underway.