The plastic industries in India has made a promising growth since its inception in 1957 and is continuing to grow exponentially in its demand and consumption. The Indian plastics market is comprised of around 25,000-30,000 companies and employs 3 million people. The growth rate of the plastic industry in India is one of the highest in the world around 16% p.a. The Plastic India Foundation had estimated the consumption of India to have reached 16kg per head by 2015. The plastic industry is considered to be a big contributor to the economy of the country.
The wonders of plastics cut across all sections of society. Due to its molding capacity, its versatility, its non-corrosive and moisture resistant properties, its physical and chemical strengths, its economic viability, it’s easy to processability and also its attractiveness and durability in all weather conditions, it has become a material of choice and of universal use.
The major uses of plastics are in the packaging industry, building industry, automotive, manufacturing of pipes, fittings, electrical accessories, consumer goods, house-ware, toys, food industry, and furniture and in a host of other spheres of life. A time has come when the plastics industry has the capacity to influence the progress of all other sectors. The plastic industry is regarded as the ‘sunrise’ industry due to its increasing versatility and burgeoning worldwide demand. No wonder we are living in the plastic age.
Diversity in the consumption pattern of the country, India observes significant regional diversity in consumption of plastics with Western India accounting for 47%, Northern India for 23% and Southern India for 21%. The bulk of the consumption in Northern India is from end-use industries of Auto, packaging (including bulk packaging), plasticulture applications, electronic appliances, etc. which are concentrated mostly in UP and Delhi- NCR (>50%). However, plastic processing in other parts like Rajasthan, Punjab, Haryana, Uttarakhand, J&K, and Himachal Pradesh is expected to grow based on increased availability of feedstock and higher focus on manufacturing sectors.
Among the various sectors of the plastic industry, the packaging industry in India has seen a strong penetration of plastics as compared to global standards. However, the agriculture sector still hasn’t explored the benefits of plastics to a large extent. The global average for plastics demand in agriculture is ~8% while India is substantially lower at only 2%.
Demand overview: As domestic plastics, demand and consumption in India continue to grow at about twice the rate of India’s overall economy, polymers are one of the highest segments with an expected growth rate of between 8-12% a year through 2020. India’s plastics industry believes the market will see more than double its polymer consumption by 2020, reaching 20 million metric tons.
Polypropylene will account for the largest growth at 18% (with consumption growing from 2.2 million metric tonnes to 2.6 million metric tonnes) as per 2011 data. 75-80% of the demand is met by the Reliance Industry and 20% by the govt. companies like Indian Oil Corporation Ltd., Haldia Petrochemicals, Bharat Petroleum Corporation LTD (BPCL) and the Gas Authority of India Ltd (GAIL). The demand stems from the growth in the construction industry which has increased the demand for PVC by almost 50% (only the domestic demand). EVA is also in high demand, with barely 10% of the demand being met by domestic-supply, in this case by Relene (a division of Reliance).
Import-export scenario: India is largely an importer of plastic from other countries. The major import source countries are Saudi Arabia, Qatar, UAE, Korea, USA, Singapore, Thailand, Germany, Spain, and Malaysia. Few Plastics materials are produced in surplus and these materials are exported to international markets. Major export destinations are China, Egypt, the UAE, Turkey, Vietnam, and Indonesia.
Prospects and problems: The plastic industry though has great prospects laid ahead with a growth rate of around 16%, consumption level lower than the global average and high investment opportunity of almost $3.7 billion ( as per 2011 data). It also faces certain problems. The huge investments had led to the use of technology like automation and conveyor belts which requires a skilled labor force, India faces a shortage in not only skilled labor force but also power deficit. The electricity demand deficit is around 13%. The environmental issues, though according to data 60% of the plastic is recycled (which has increased the prospects of recycling companies in India) however, the system of recycling and collecting waste plastic remains highly ineffective leading to increasing landfills and entering of plastic in the food chain. This has a direct implication on its demand.
On August 15th, 2019, the government of India announced that single-use plastics are to be banned. This announcement has created problems for the informal sectors leading to unemployment of thousands of workers, the problem with this sudden decision is also that it does not list all the items that come under single-use plastic, like only stating a ban on 50 microns thin plastic also means banning the food wrappers of biscuits and snacks, however, there are no alternatives present to it. This has led to a kind of confusion leading a conflict between the authorities and the small entrepreneurs, whose materials have been confiscated without specifying their category ( decline in informal sector is also one of the factors which have led to the slowdown of the economy, as it contributes a high % towards GDP and also creates employment).
Other problems that the industry faces is the price pressure, as it is largely dependent on petrochemical industry for inputs due to the volatility in its prices in the recent times it has caused problems for the plastic industry.
In conclusion, we can say that though there are great prospects for the industry’s growth there is also a need to address other question, how do we choose between the growth of an industry and its contribution to GDP and the consequences of this growth higher landfills, plastic in the food chain? What kind of growth do we want?