market analysis | India’s plastics industry
India’s polymer demand for 2013
production but Indian polymer consumption trails in this and many other applications.
Engineering plastics PE PET PS PVC PP Changes in supply structure
Source: Applied Market Information Ltd 2013
tion of the Jute Packaging Act, the Micro Irrigation Scheme and improving foreign direct investment (FDI) conditions in the country’s Special Economic Zones. In 2013 it was announced the Indian government is to
construct six ‘plastic parks’ in Punjab, Haryana, Rajasthan, Uttar Pradesh, Odisha and Andhra Pradesh. The plastic park scheme is to encourage clusters of small- and medium-sized plastic processing companies, as well as recycling organisations, to set up in India. The recent legal relaxation of foreign retailers
Only 5% of the food sold in India is packaged
investing in India’s multi-brand retailers has the potential to westernise the packaging industry. At present only 5% of food is packaged and only 10% of retail is organised. Since 2012, India has allowed foreign retailers to take a 51% stake in multi-brand retailers, provided that investments are larger than US$100 million and retailers source 30% of produce from local small enterprises. There is also regulation that now allows 100% FDI in food processing companies. The Indian automotive industry is already attracting investments from foreign producers that have located production plants in the country to benefi t from low labour costs and a closer proximity to
emerging Asian markets. Foreign producers include Ford and Hyundai whilst domestic manu- facturers include Mahindra and Tata Group.
Foreign investment and
increased production has aided penetration of polymers in various automotive applica- tions. For example, in 2011 Maruti Suzuki introduced a new fuel effi cient model that incorporated a plastic fuel tank. HDPE fuel tanks are standardised in western
14 INJECTION WORLD | March 2014
What does the future hold? Despite the continuing eurozone crisis and slowing global growth, Indian GDP is expected to outperform the majority of international economies growing at over 6% per year up to 2017.
Indian polymer demand will grow
ahead of GDP rates as plastics continue to penetrate applications in packaging,
www.injectionworld.com
Indian polymer production is particularly concen- trated with nearly 50% of commodity resin accounted for by one producer, Reliance Indus- tries. It has been the largest player for more than a decade after it purchased Indian government run IPCL. The most recent capacity expansion project concerns PE, PVC and PET, costing US$12 billion and the respective plants are due to be commissioned between 2013 and 2016.
Indian Oil is the second largest producer and owns
over 10% of Indian production, although it only produces PE and PP grades. Financially challenged Haldia owns a further 10% of resin capacity, while the remaining 30% of polymer production is split between 14 substantially smaller producers. In contrast to resin supply, the polymer processing
industry is for more fragmented with 75% of India’s processors classifi ed as small-scale operations and together commanding just 30% of polymer consump- tion. These processors are typically very small family- run companies with limited technical capability and fi nancial resources. Protectionist tendencies of national and regional governments continue to pose a threat to the develop- ment of the plastics processing industry. In 2012, for example, India proposed to ban the import of second- hand machinery that was more than fi ve-years-old in order to protect its indigenous capital goods industry. While on the one hand such a move may encourage investment in newer equipment, the move was generally opposed by organisations such as the Chamber of Industrial and Commercial Undertakings (CICU) as likely to particularly impact on the ability of micro-, small- and medium-sized
enterprises (MSMEs) to expand and grow their business as such
companies often rely on low-cost second-hand equipment.
PHOTO: PAWANJI SPICES
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