Need for National bioplastic policy, providing fiscal benefits and formulating a regulatory framework vital to boost India’s bioplastics industry and promote sustainability: EY – ASSOCHAM report

• Establish India as a premier hub for production of bioplastics: Report calls for comprehensive National Bio-Plastics Policy in India
• Fiscal incentives – Capital subsidies of up to 50% on eligible capital investments over five years are recommended to encourage the development of bioplastics manufacturing and infrastructure.
• Regulatory framework – mandating use of bio-plastics, implementing QCOs, imposing import restrictions, rationalizing GST rates required for the growth of industry
• Government support for research and development, job creation, and infrastructure within these clusters is essential for advancing technological innovation and ensuring economic viability.
• Educational campaigns and allocating funds under the Swachh Bharat Mission to promote bioplastics and support composting initiatives.

New Delhi, 17 September 2024: A national policy is needed to establish India as the leading bioplastics manufacturer, with recommendations for capital subsidies and government support for infrastructure and R&D, according to a recent report by EY and ASSOCHAM titled “Incentivising Bioplastics, a Biopolymer”. The report outlines a strategic vision for transforming India’s bioplastics industry through targeted government interventions and regulatory changes along with educational campaigns and leveraging India’s agricultural strengths to enhance sustainability and environmental performance.

The report highlights India's pivotal role in the plastics industry, marked by its vast market and production capacity, yet shadowed by the environmental challenges posed by traditional plastics. Bioplastics, with their compostable properties, present a promising solution to the escalating plastic waste crisis which is causing environment and health concerns. The objective of the report aligns with the recently notified BioE3 (Biotechnology for Economy, Environment and Employment) policy which aims to foster high performance bio-manufacturing in India to facilitate a shift from chemical-based industries to sustainable bio-based models, promoting a circular bioeconomy and working towards achieving net-zero carbon emissions. The said policy recognizes biopolymers as one of the strategic sectors for sustainable growth which aligns with India’s vision of a cleaner, greener, and more prosperous future.

“The government must play a key role and take firm actions to ensure bioplastics succeed and grow in India. Government-backed fiscal incentives and regulatory policies are paramount in overcoming initial market entry challenges, such as high production costs and mandating their use” said Deepak Sood, Secretary General, ASSOCHAM.

Reflecting on the report’s findings, Bipin Sapra, Tax Partner, EY India said, “The ban of identified single use plastics in 2022 needs to be implemented in full for the creation of a demand for sustainable alternatives such as bioplastics. By allowing grants, subsidies and apt regulatory framework, the Indian government can incentivize businesses to invest in bioplastic production, research and development. These incentives will not only bolster the economic viability of bioplastics but also foster innovation, paving the way for superior and more cost-effective bioplastic products to emerge in the marketplace.”

Formation of a national bioplastics policy

The EY – ASSOCHAM report emphasizes the need for the Government of India to develop and implement a 'National Bioplastics Policy' to establish India as a leading destination for bioplastics manufacturing. Such a policy is crucial for enhancing domestic capabilities in the production, application, and recycling of bioplastics. It may include provisions for composting and waste segregation at the municipal level. By fostering a clear and supportive regulatory environment, the policy could stimulate innovation and investment, positioning India more competitively in the international market. By the year 2040, goal may be to achieve a transformation in India’s consumption patterns by replacing 50% of single-use plastics with compostable alternatives, thereby significantly reducing the environmental footprint.

Incentives and fiscal support

The analysis suggests that substantial fiscal support is necessary to drive the growth of the bioplastics sector. It highlights the importance of offering capital subsidies of up to 50% on eligible investments over five years. The report also recommends introducing strategic incentives to encourage the phased adoption of bioplastics and rationalizing GST rates on these materials to 12%. These measures are proposed to help offset the initial costs and promote wider adoption.

State governments may introduce a Sector Specific Scheme offering fiscal benefits, including a 50% capital subsidy, 7% interest subvention for seven years, SGST reimbursement of investment for 14 years, power rebates, and land subsidies. This scheme may allow integration with existing policies or customized policies for large investments.

Establishment of a bioplastics cluster

Establishing a ‘bioplastics cluster’ aims to focus on the recovery phase of bioplastics, promoting a circular economy. The government may support this by funding R&D, fostering academic-industry partnerships, and incentivizing advanced bioplastic technologies. Key infrastructure investments and job creation are also crucial.

The cluster will benefit both major industry players and MSMEs. Implementing these recommendations will help India integrate bioplastics into its environmental and economic strategies, leveraging its biomass potential and moving towards a circular economy.

Regulatory framework

To boost the use of bioplastics, a phased approach similar to the elimination of single-use plastics may be adopted, with bioplastics included in India's Plastic Pact. Sector-specific restrictions on single-use plastics may be imposed, with mandatory usage of bioplastics as a replacement. Special regulatory committees may be established to monitor the bioplastics industry, and the Plastic Waste Management Rules, 2023 may be amended to cover bioplastics. Protections for the domestic bioplastics industry could include issuing Quality Control Orders (QCO) for bioplastic standards, setting import quotas and imposing higher customs duties.

Public awareness and education

Raising public awareness about the benefits of bioplastics and proper waste disposal is highlighted as a critical need. The report suggests launching educational campaigns and allocating funds under the Swachh Bharat Mission to promote bioplastics and support composting initiatives. Such efforts are expected to enhance public understanding and drive community engagement. By leveraging its biomass potential and agricultural strengths, India can enhance its Environmental Performance Index (EPI) and achieve its long-term sustainability goals.

Notes to Editors

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