Laminate industry approaches NITI Aayog, DPIIT for inclusion in PLI scheme

In a representation to the government think tank and the
DPIIT, laminate manufacturers said they are one sector where India is at the
forefront, but pressures from countries such as China present the need to
maintain aggressive export pricing without compromising much on margins.

The representation made by the Indian Laminate
Manufacturers’ Association (ILMA) said the PLI
Scheme has announced practical but attractive benefits for the manufacturing
sector with a clear intention to boost industrial development.

Providing benefits to the laminate sector will not only
cement its position in the world market, but also expand its horizon to newer
shores, said Rashmi Deshpande (partner at Khaitan & Co), who assisted ILMA
in its representation.

“Besides, this additional incentive is likely to give
impetus to further R&D in the sector,” Deshpande said.

Until recently, the sector benefited from general export
promotion schemes such as the Merchandise Exports from India Scheme (MEIS).
However, upon withdrawal of MEIS with effect from January 1, 2021, the sector
no longer enjoys any benefit. The recently announced Remission of Duties and
Taxes on Export Products (RoDTEP) scheme does not sufficiently incentivise
investment-led incremental production and capacity building, the association
said in its representation.

India is one of the top five laminate exporters in the
world. In fact, laminate manufacturing is one of the few sectors where Indian
players have the potential to move ahead of their Chinese counterparts. A PLI
boost will go a long way in ensuring its continuous rise, it said.

The combined sector revenue stood at Rs 8,000 crore, 25 per
cent of which accrued from exports to over 100 countries, during 2020-21.

The global furniture market, for which laminate is a major
raw material, is valued in the range of $580-620 billion, 35-40 per cent of
which is catered to by global retail trade. China, Vietnam, and Malaysia are
the three major Asian exporters of furniture products.

As leading multinationals explore options to shift their
operations outside China, India is aiming to achieve a sizable share of global
furniture manufacturing and export over the next 4-5 years.

“Given its current strength, if backed by the PLI Scheme,
the laminate industry is confident to become the world’s manufacturing hub and
gain market share globally” said Saurabh Mittal, managing director & CEO of
Greenlam Industries Limited and founding member of ILMA.

According to industry analysts, the laminate sector faces
stiff competition from emerging countries such as Thailand, Malaysia, Indonesia
and Vietnam. China, which is already an established competitor, has easy access
to new and emerging Asian markets owing to the ASEAN-China Free Trade
Agreement, which has the effect of making available Chinese goods into these
markets duty-free.

This acts as a major hindrance for Indian-manufactured
products, which attract import duties in the range of 10-25% in these markets.
India faces a similar problem owing to China’s favorable trade terms with
countries in Latin America. This, coupled with removal of India’s status by the
USA from its Generalized System of Preferences (GSP) programme has put further
pressure on the country’s exporters.

Moreover, Indian imports attract a higher duty rate in North
America vis-à-vis imports from the European Union which is yet another region
having a sizable laminate manufacturing industry, the association said.

The government has already announced a PLI
scheme for 13 sectors, including electronic products, medical devices,
pharmaceuticals drugs, telecom and networking products, food products, ACs,
LED, automobiles & auto components, textile products and speciality steel. Courtesy:
www.business-standard.com