market analysis | India’s plastics industry
India’s GDP is expected to outperform
most interna- tional econo- mies, growing at over 6% per year up to 2017
pipe, automotive and electronic applications, driven by a mix of government spending on infrastructure projects, private investment and rising consumer demand. As the Indian economy develops and becomes
westernised, huge opportunities will arise in the plastics processing sector. For example, now that multi-brand organised retail has been opened up to foreign invest- ment, supermarkets will require a reliable local supply of plastics packaging to extend shelf-lives and improve transportability of their produce. Ultimately, initiatives like this will modernise the plastics industry as demand for transit and retail packaging develops from an embryonic base. In addition, consolidation will occur as OEMs prefer to liaise with large processors capable of supplying across the country instead of several smaller regional businesses. Such alterations in market dynamics will provide
improved prospects and organic growth to Indian companies, as well as opportunities for multinational processors to enter the market to drive their own growth targets.
Market challenge
However, the plastics processing industry in India still faces a number of challenges which need to be addressed.
First of all there is the infrastructure, which does not just relate to transport links but to a whole range issues from energy to the banking system, the limitations of which all serve to hold back business.
Secondly, India remains desperately poor, particu- larly in rural areas, and governments have struggled to introduce policies to extend the economic growth from the urban centres to the rural areas.
20000 Demand Capacity
Thirdly, whilst these countries tend to have a strong entrepreneurial ethic, this has led to a proliferation of small processing companies, running old and ineffi cient equipment, which lack the access to capital to invest and really develop an internationally competitive, modern manufacturing industry. The plastics process- ing industry in India needs to rationalise and consoli- date to reduce costs and improve performance. Fourthly, national and regional government policies are often counter-productive and discourage private investment (eg high tariffs, and the blocking of FDI). Despite the industry’s rapid growth in recent years,
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plastics processing remains underdeveloped with enormous potential for further penetration in packag- ing, agriculture and building, as well as developing a more consistent manufacturing base. Traditional materials, such as paper and metals, are frequently still preferred due to availability and cost in many end-use applications. Per capita consumption of polymer remains below 9kg compared to a world average of 28kg. Although per capita consumption has already increased rapidly, substantial potential still remains and demand for polymers is expected to continue growing substantially over the next fi ve years. In its report AMI forecasts a 9% per year average increase, which will push demand in India close to 16 million tonnes by 2017.
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Ultimately, investment opportunities and growth will be dependent on the success of regulation reform, incentives for FDI and how quickly the economy’s structure develops more consolidated and effi cient operations.
5000 More information 0 2012 2013 2014 2015 2016
Indian polymer demand and capacity 2013-2017 Source: Applied Market Information Ltd 2013
16 INJECTION WORLD | March 2014 2017
The Indian Subcontinent Plastics Industry Report covers India, Pakistan, Bangladesh, Sri Lanka and Nepal. It is now available from AMI Publishing. Full details can be found at:
http://bit.ly/IndiaAMI.
www.amiplastics.com
www.injectionworld.com
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