Amazon, H&M and other multinationals pressing to soften Indian state's plastic ban

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MUMBAI, June 29 (Reuters) - Multinational companies like Amazon Inc and H&M are lobbying to soften a ban against single-use plastic imposed by an Indian state last week, according to four sources familiar with the matter.

The ban by the state of Maharashtra, home to India's financial capital of Mumbai, could sharply raise costs for companies that rely heavily on plastic for packaging, such as retailers, beverage makers and sellers of bottled water.

Maharashtra's move, the first such broad action against plastic by an Indian state, comes as Prime Minister Narendra Modi pushes a plan to completely end the use of single-use plastic in India by 2022.

Plastic packaging accounts for nearly half of all plastic waste globally, and much of it is thrown away within just a few minutes of its first use, according to the United Nations.

Representatives of companies including Amazon, H&M, Pepsi and Coca-Cola, as well as plastic industry bodies and lobby groups, met with Maharashtra government officials days before the ban came into effect on June 23, urging them to implement the rule in phases and relax some norms, said the four sources who declined to be named.

"Our demand to the government is: give the industry seven years to come up with alternatives," said Neemit Punamiya, general secretary of the Plastic Bags Manufacturers Association of India, who attended the meeting. "It cannot happen overnight - we've got investments, we've got loans to pay and people to manage."

The Federation of Indian Chambers of Commerce and Industry, whose members include online retailers such as Amazon India and Flipkart, said in a June 7 letter to the state government that such a ban "will not be without its own share of adverse environmental impacts which are largely driven by issues associated with the use of alternatives."

The Internet and Mobile Association of India, which also counts Amazon and Flipkart as members, said it had asked the state to ease the rules but did not specify what relaxation it was seeking.

Beverage makers such as Pepsi and Coca-Cola, meanwhile, want an exemption from the rules as they mandate a buyback of empty bottles at a guaranteed price, which will raise costs, another source familiar with the talks said.

Amazon, Flipkart, Pepsi and Coca-Cola did not respond to requests for comment. H&M said in a statement that it supported reusing and recycling, adding that the company had asked the government to clarify the rules and for help coming up with solutions.

Maharashtra's environment minister said Wednesday that the government would relax rules for neighborhood grocery stores allowing them to pack commodities such as rice and pulses in plastic. They would, however, have to ensure buyers return the packaging for recycling.

A senior state official told Reuters the government could moderate some aspects of the rule for online retailers as well or give them more time to comply. Another official confirmed that issues raised by the industry was being looked into.

Both officials declined to be named as the talks are not public.

ENFORCING COMPLIANCE

Maharashtra's plastic ban includes bags, food containers, spoons, forks, glasses and packaging wraps - which the local plastics industry says could cost it up to 150 billion rupees ($2.20 billion) a year and nearly 300,000 jobs.

For online retailers, cost is one of the main issues.

An e-commerce industry source said that packaging charges comprise about 2 percent to 3.5 percent of fulfillment costs - the price of shipping, delivery and compensating sellers for discounts - and that the use of biodegradable plastic or other alternatives could push these costs higher.

Cardboard boxes, for example, could cost nearly a third more than plastic packing, according to industry estimates cited by the Economic Times daily.

Since the ban came into force, squads of officials in Mumbai have been raiding shops and restaurants, sometimes accompanied by police, to enforce compliance.

Violations could result in penalties of up to 25,000 rupees ($362.49) and jail terms of up to three months.

Nidhi Choudhari, Mumbai's deputy municipal commissioner, told Reuters it has collected more than 1.3 million rupees in penalties so far.

Bharati Chaturvedi, founder of the Chintan environmental advocacy group in New Delhi, said she feared the plastics industry would use any compliance extensions to try to put off the ban indefinitely.

"We should really have a hard ban," she said.

($1 = 68.9675 Indian rupees) (Reporting by Sankalp Phartiyal and Rajendra Jadhav; Additional reporting by Danish Siddiqui and Swati Bhat; Editing by Krishna N. Das and Philip McClellan)