The Indian plastics industry was established during the 1950s with the construction of facilities for the manufacture of polystyrene and polyethylene. However, the industry expanded significantly only after the establishment of petrochemical complexes by companies such as National Organics and Chemicals 0Industries Limited (NOCIL), Indian Petrochemicals Corporation Limited (IPCL), and more recently, Reliance Industries Limited (RIL). Economic growth, improved availability of polymers and concern over depletion of scarce natural resources has established plastics as the material of choice in innumerable applications. The Indian resin industry has traditionally been import-intensive, largely because of inadequate domestic capacity. However, the proposed capacity additions should ensure that local resin producers are in a position to meet the entire requirement of the country.
Market Characteristics
The plastic industry end-user segments are broadly classified into Packaging, Consumer products, Construction, and Industrial products, among which, packaging accounts for 40% of the overall demand. With appropriate support to the industry, the per capita plastic consumption in India is expected increase by 50% from the present 1.8 kg by the year 2005. The unorganized sector dominates the numbers in each of these user segments, and thus it is difficult to acquire relevant data.
With rapid growth in production capacity and planned expansions, India is expected to become self-sufficient in resins by 2000-2001. The demand - supply gap in this sector is created due to lack of planning- which is reflected in the following statistic: While the Indian resin production capacity (approximately 2 million tonnes) is not fully utilized, imported resins satisfy nearly one third of total demand. India has witnessed substantial capacity additions in last few years, and the total capacity of commodity resins currently stands at 2.3 million tonnes. New plant construction, and expansion of existing units, will add another 1.5 million tonnes of capacity by the year 2003.
The resin industry is broadly classified into commodity resins (polyethylene, polypropylene, polyvinyl chloride, polystyrene), engineering resins (ABS, polyacetals, polycarbonate), and miscellaneous others (thermosets and elastomers).
The industry is looking for some policy changes in the government to provide the required impetus in the face of significant price hikes in the raw materials. Despite steep raw material price rise (ranging from 42% to 56%) the finished products' producers have been able to rise the price by only 20-25 percent due to market resistance, resulting in many manufacturers have cut down production 20 percent. The SAARC countries are engaging the Indian industry in a stiff struggle.
Key Inputs and Technology
In plastics, cost and efficiency of raw material are often major factors that determine the form of the end product, and thus is a key success criterion. Cost of raw materials has been on an increase over the past few months, laying more emphasis on sourcing abilities of resin plastic manufacturers.
The polymer industry in India is dominated by domestic industrial houses, who need to import foreign technology and equipment for their plants. Packaging industry, and hi-tech resins offer considerable scope for growth, and technologies should be acquired to enable efficient manufacture of the same.
Government Policy
The Indian industry is looking forward to more measures from the government to help it grow exports substantially. These are in the direction of reducing import costs, in order to make the raw materials more easily available to the smaller players.
Major changes in import policies, and the lowering of tariff barriers in the petrochemical sector, has been the most visible advantage for the foreign plastic packaging producers, and there are no major entry barriers for foreign suppliers.
Outlook
Quality will be the key for growth in the segment, in the face of significant competition from large-scale manufacturing capacities, particularly in the more developed countries. Increasing prices of raw material necessitate global linkages leading to more efficient sourcing.
Environmental groups are increasingly active- they will drive the industry towards more eco-friendly technologies. The ban of plastic bags in Delhi, is a pointer of the things to come, as environment friendly production could well become a key competitive advantage.
The company that manages to train and retain the best engineers, especially given the demand for Indian engineers abroad, will have a near unbeatable competitive advantage.
An Overview
Plastic has become the 'all-purpose' material. From packaging, plastic plants, domestic items, containers, pipes to automobile parts, the plastic industry has come a long way from its small beginnings about a hundred years ago. Some of the processes involved in plastic technology are compression, moulding, lamination, fabrication etc. Injection moulding and blow moulding are the commonly used processes.
The automotive industry is a major user of injection moulding components, other than the paint industry (for making containers), medical equipment (syringes), electrical appliances (switches) and the FMCG industry (container caps). The total demand in the country for injection moulding components is about 1,000 per annum, which is growing at around 15 per cent every year.
