Packaging industry faces crisis as tinplate imports fall

Steel Insights

Domestic metal container makers are facing tinplate availability crisis as foreign suppliers have stopped shipping tin plates to India due to imposition of Bureau of Indian Standards (BIS) certification requirement leading to shortage in the import-dependent domestic market, according to Metal Container Manufacturers’ Association (MCMA).

“There is a huge demand-supply gap of the major raw material i.e. tinplate/ tin free steel to the extent of 2.5 lakh tons per annum which is met through imports. Although the local mills claim to have annual rated capacity of about 7 lakh tons, they have never been able to produce more than 4 to 4.5 lakh tons,” the association said in a release.

Following the supply shortages, in October-December, there is an increase of about 6 percent to 7 percent in the tin plate/ tin-free steel prices along with another 7 percent to 8 percent announced increase from January onwards, MCMA claimed.

The industry apprehends further increase in the prices of tinplate/ tin free steel which is almost equal to 60 percent cost of a tin container/closure and the industry fears a further increase April onwards.

“This exorbitant price increase in tinplate, consequently cans, may force our customers to move away from metal packaging to other alternate packaging options especially in food, beverage and paint industry,” the association said.

The BIS Notification mandates domestic and foreign suppliers of these products to adhere to Indian quality standards.

“Unless the government put its order on hold there would be a cascading effect with huge job losses and shortage of metal packaging to the food and pharma industry,” the body said.

It may hit a large number of micro, small and medium enterprises involved in making products using tinplate steel sheets of steel coated with a thin layer of tin that have specialized use in consumer products like cans, hairclips, pens.

MCMA demands that BIS notification needs to be reviewed as it will impact the overall metal packaging industry, which employs over a lakh people and generate revenue for the country.

Similar Notification imposing mandatory BIS standards has been brought earlier in the year 2008, 2015 and 2017 however, after considering representation from trade and industry and keeping in mind practical issues in implementation, the said notifications were withdrawn.

The local producers also filed applications with Directorate General of Trade Remedies (DGTR) for imposition of Anti-Dumping Duty on import of tinplate which was favorably considered by DGTR in June, 2020.

Following this, the DGTR recommended levying Anti-Dumping Duty ranging from Rs 15,000 to Rs 25,000 per tons for import of tinplate/ tin free steel etc. from select countries.

After representation of MCMA, the government decided to drop such recommendation for imposition of antidumping duty.

MCMA representing the interests of companies involved in the production of metal containers, packaging and allied components.

“Global tinplate suppliers are not very much interested to get BIS certification.” MCMA

“The QCO has been notified at a time when the entire industry is struggling hard to reset their business during Covid time. Also it is virtually impossible to force the international suppliers to go for BIS certifications as the procedure of BIS registration is highly cumbersome,” the association said.

For international suppliers of tin plates, India is a small market so they are not very much interested to get into lengthy bureaucratic and cost intensive BIS certification procedures. The industry which is mainly concentrated in MSME will not be able to survive the hefty price increase of tinplate, loss of business to other packaging material and increase in working capital requirements,” MCMA said.

Metal packaging caters to a wide range of foods, beverage, pharmaceuticals and nonfood products paints, pesticides & chemicals etc. Metal packaging has 10 percent share in overall packaging industry.

The industry is providing packaging material and packaging solutions in the form of tin container, component closures etc to food, beverages & other household Industry.

Considering Covid-19 situation with restriction on movements in and out of country including international travel, MCMA also recommended to defer this notification till March 2022.

As foreign tinplate producers will not be able to get the relevant BIS License during current difficult period, there is a uncertainty and no one is prepared to take a risk to travel internationally even if it is allowed in next few months, the association argued.