Global Report India: Plastics are the material of choice for packaging
A report prepared by FICCI and TSMG on the plastic industry titled ‘Plastic Packaging - The Sustainable Choice’ was recently released by FICCI in New Delhi. The Indian packaging industry constitutes 4 per cent of the global packaging industry but it is expected to grow in the following years.
Today plastics are the material of choice in packaging for sectors such as FMCG, food and beverages, pharmaceuticals, etc. Plastics are used heavily for packaging owing to its innovative visual appeal for customer attraction and convenience. Additionally, it improves the hygiene quotient and shelf-life of the products especially in the food and beverages segment. A report prepared by FICCI and Tata Strategic Management Group (TSMG) on the plastic industry titled ‘Plastic Packaging - The Sustainable Choice’ was recently released by FICCI at a conference on the plastic packaging industry in New Delhi. Packaging is one of the fastest growing industries and stands at 700 billion USD globally. Plastics comprise of 42 per cent of packaging with the combination of rigid and flexible plastics in packaging. It has grown higher than the GDP in most of the countries.
The Indian industry and plastic packaging
In a developing country like India, it grew at a CAGR of 16 per cent in the last five years and touched 32 billion USD in FY15. The Indian packaging industry constitutes 4 per cent of the global packaging industry. The per capita packaging consumption in India is quite low at 4.3 kg, compared to countries such as Germany and Taiwan where it is 42 kg and 19 kg respectively. Overall, the Indian packaging industry is valued at over 32 billion USD and offers employment to more than 1 million people across the country through 10,000 firms approximately. In the coming years it is expected to grow at 18 per cent p.a. wherein the flexible packaging is expected to grow at 25 per cent p.a. and rigid packaging to grow at 15 per cent p.a. The overall packaging industry in India has a huge growth potential and is expected to reach $73 billion in the year 2020. In India, the industry is driven by key factors such as rising population, increase in income levels and changing lifestyles. Growth prospects of end-user segments are leading to rise in the demand of the plastic packaging industry.
Demand from rural sector for packaged products is being fuelled by the increasing media penetration through the means of internet and television. Out of 30,000 processing units, about 75 per cent are in the small-scale sector. The small-scale sector, however, accounts for only about 25 per cent of polymer consumption. The industry also consumes recycled plastic, which constitutes about 30 per cent of the total consumption.
The future growth
India is a growing market for plastics and consumes about 12.8 Million Metric Ton (MMT) of plastics annually against global consumption of 285 MMT per year. The plastics and polymer consumption is growing at an average rate of 10 per cent. About 30,000 processing units with 113,000 processing machines have created manufacturing capacity of 30 MMT per annum in India. This has been achieved with a 13 per cent CAGR of processing capacity during the last five years. The industry has invested 5 billion USD in the machinery and it is expected to make further investment of 10 billion USD for further increase in capacities during the next five years.
Further, India is emerging as the most favored destination for organized retail in the world. And also the presence of e-commerce is expanding rapidly and is bringing around a revolution in the retail industry. Retailers are now leveraging digital retail channels thereby enabling wider reach out to customers with less amount of money spent on real estate. Therefore, organized retail and boom in e-commerce offers huge potential for future growth of retailing in India which in turn is pushing the growth of the packaging sector.