18 per cent GST on recycled plastic granules leaves rag pickers in distress

Ragpickers, the unsung green warriors who collect and segregate plastic waste, are in distress as an 18% GST on recycled plastic granules has brought the industry to a standstill.

Published: 20th August 2017 01:19 AM  |   Last Updated: 20th August 2017 07:58 AM   |  A+A-

A worker segregates waste at a plastic recycling plant in Choolai | shiba prasad sahu

Express News Service

CHENNAI: Vijay Kumar, 37, a ragpicker residing in the vicinity of Kodungaiyur dump yard, was a busy man until July 1, when Union government rolled out the Goods and Services Tax (GST). His little world began falling apart as the trash that he collects for living became non-lucrative overnight.

Prior to GST, Kumar was earning Rs 10,000 on an average per month after working tirelessly for 12 hours a day, scrounging for waste materials inside dump yards and across city lanes. Now, the same efforts are fetching him Rs 4,000. All because the Narendra Modi government has included recycled plastic granules, which are produced from wastage, in the 18% tax bracket, eating directly into the income of ragpickers.

A worker walks amid bags of unsold plastic scrap at a recycling plant in Chennai on Saturday. Dealers say many buyers are not willing to pay GST, and profits have come down alarmingly | shiba prasad sahu

For example, one kilogram of used milk packets, which were sold for Rs 20 at retail scrap centre, are now being sold for `10. Same is the case with all other plastic recycle waste. The rates have been cut by half. This may grow into a major disaster as many ragpickers have stopped collecting waste and it will not take much time before cities are staring at a major civic crisis.

R Suresh, another ragpicker in Poonamallee, says he has turned to manual scavenging. Same is the case with many. Ragpickers actually complement the work of civic bodies and are the real green warriors, acting as a reserve force that helps keep cities clean. Despite performing a very useful social service at great risk to their health and well-being for little money, their contribution to Swachh Bharat is clearly being undermined.

“Why tax the scrap which is lying as waste on the road and snatch our last meal?” asks Santhanamma, a migrant from Andhra Pradesh who once used to clean toilets in Chennai Central, before settling down as a ragpicker. There are about 40 lakh ragpickers in India and 60,000 in Chennai alone, which generates 5,000 tonnes of garbage per day. Of that waste, 400 tonnes (8%) are plastic. The ragpickers, who sustain themselves by collecting, sorting and segregating waste, and then trading it, clear  90% of this recyclable waste, thereby contributing immensely towards environment protection.

This may not be the case henceforth. As Express traverses colonies abutting the Kodungaiyur and Pallikaranai dump yards, where a majority of ragpickers and plastic recycling units are concentrated, the signs are ominous. The entire plastic recycling supply chain, including ragpickers, retail scrap collectors, wholesale collectors, processing units and product manufacturers, is in distress.

G Vaidyalingam, who has been in the plastic processing business for the past 17 years in Kodungaiyur, says the input from wholesale scrap dealers has reduced drastically. “We used to process about 20 tonnes of plastic waste into chips per month and now it is 7 tonnes. I stopped even that since everything has to be billed now and the buyers are not ready to pay 18% GST. The lorry owners are also not willing to transport the material fearing police checks. I am stocking `10 lakh worth of goods and until I sell this, I can’t even purchase fresh scrap.”

G Sankaran, president of the Tamil Nadu, Pondy Plastic Association, told Express that there are 8,000 registered and 10,000 unregistered plastic units in Tamil Nadu, generating a revenue of about `2,000 crore. The industry provides employment to two lakh persons directly and four lakh indirectly. On an average, 15 lakh tonnes of plastic is recycled in Tamil Nadu annually, of which 6 lakh tonnes is consumed domestically. The rest is exported to other states in the form of chips and granules. Now, exports have completely stopped as buyers have refused to pay 18% GST.

“This is the sector that compliments the civic bodies in keeping the city clean. The recycled plastic granules, which are produced from wastage, were exempted from Central Excise Duty. Only 5% VAT was imposed. Now, we have 18% GST,” he said, requesting the Union government to reconsider its decision.

Arpatharaj, a pet-bottle recycler in Otteri, says the situation is very grim and if the stalemate continues, Chennai's roads would be filled with trash very soon. When contacted, Chennai Corporation officials acknowledged that it was serious problem. “This informal sector has definitely reduces the burden on the civil body. Though all households are requested to segregate waste at its source, it is seldom done. Ragpickers are the ones who do the job,” the official says, on the condition of anonymity.

State Environment Minister KC Karuppanan told Express that the government was aware of the impending crisis and had already written to the Union government and GST council to either exempt plastic scrap or bring it to 5%, like earlier. Sources in the Union Commerce Ministry said the government had received requests seeking exemptions on several products which have a direct bearing on the lower and the middle class. “The government is positively looking at the requests,” a senior official in the ministry said.

Manmohan Chavan, president of the Delhi Scrap Dealers Association, says that there was no tax on the business before in Delhi and Kerala. “In the absence of recycled plastic, poor people will be forced to use virgin plastic. We have met Finance Minister Arun Jaitley and Commerce Minister Nirmala Sitharaman, but there has been no response. In Delhi alone, there are five lakh ragpickers.”

TANPPA planning unique protest

G Sankaran, president of Tamil Nadu, Pondy Plastic Association (TANPPA), said that if governments don't heed their request, the association will be forced to resort to other methods. “If our stocks yards are full, then there is only one way to attract attention, which is by dumping all the scrap in front of government offices. We are holding discussions.

Shortly, we will announce a deadline to reduce GST,  failing which we will intensify the protests,” he said. Sankaran said the association only wants exception for scrap collected from streets, not industrial plastic waste. “That is because factories buy plastic raw materials after paying 18% GST. And when the entrepreneur sells the plastic scraps, he collects 18% GST. There is no loss or gain,” he explained.

Key facts

India currently generates 62 million tonnes of waste annually. This is estimated to rise to 165 million tonnes by 2030, and 450 million tonnes by 2050.

Only 22-28% of the waste collected is processed or treated.

Per capita waste generation rate in Indian cities ranges between 200 and 870gm per day. In Tamil Nadu it is 10kg per annum.

Chennai generates over 5,000 tonnes of garbage per day, of which plastic waste accounts for
400 tonnes.

15 lakh tonnes of plastic waste is generated annually in Tamil Nadu, of which 6 lakh tonnes is recycled for domestic consumption and around 9 lakh tonnes is exported as chips and granules.

Tamil Nadu has 8,000 registered and 10,000 unregistered plastic units providing employment to 2 lakh people directly and 4 lakh indirectly.

The annual turnover of the plastic recycling industry is Rs 2,000 cr.

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