India's plastic boom shows no sign of slowing down, with the nation's plastics processing market growing at an annual rate of 25 percent and with industry leader Reliance Industries Ltd. adding large amounts of capacity of polypropylene, polyethylene and PET resin.
The plastics market has averaged 13-18 percent overall growth in recent years, with annual PP growth close to 20 percent, Reliance executive director Nikhil Meswani said at K 2007 in Dusseldorf.
``Right now, India is exporting about 40 percent of its resin to global markets,'' Meswani said. ``But most of the new capacity will be used in India for infrastructure, retail and packaging.''
That new capacity includes 900 million pounds of PP capacity that opened this year in Jamnagar. Another 2 billion pounds of PP will be added there next year, along with 330 million pounds of PET. By 2012, a new ethylene cracker at the site will provide enough raw material for more than 2.6 billion pounds of PE.
Mumbai-based Reliance is doing its part to create retail demand by opening its own line of retail stores under the RelianceFresh, RelianceOne and RelianceMart names. The firm opened its first store in early 2006 and now operates 340 of them across India.
Meswani said that retail ``has huge potential, because it gets us one step closer to the customer.'' He added that he didn't believe there's any perception of Reliance using its status as a resin supplier to gain business with companies that make plastics products - products that end up on the shelves of Reliance's retail stores.
India's young demographic is expected to help per capita plastic consumption grow from 11 pounds to 22 pounds in the next 5-7 years. The global average is 55 pounds.
``Seventy percent of India's population is under the age of 40, and our median age will be 25 until 2025,'' he said. ``That's starting a new level of consumerism.''
Reliance is encouraging growth in India's plastic processing market through federally funded strategic economic zones, several of which are dedicated to plastics.
``You have to remember that there really was no processing industry 20 years ago, and now there are more than 200 major players,'' he said. ``Some consolidation will happen naturally, but the market still should continue to grow at twice the rate of [gross domestic product]. Retail, new packaging and agriculture will dramatically push plastic into the future.''
Meswani also played down rumors that Reliance and Dow Chemical Co. would enter into some type of petrochemical partnership. Reports of such a deal were published in several media outlets earlier this year.
In Meswani's opinion, the rumors may have come from Reliance's longtime PP technology licensing agreement with Union Carbide Corp., which Dow acquired in 1999. That technology is used in 80 percent of Reliance's PP output.
``We have a very significant relationship with Dow, but today it's limited to polypropylene technology,'' he said. ``But people do like to speculate.''
That's likely because Reliance - with businesses in oil and telecommunications as well - ranks as India's largest firm with annual sales of $27 billion. Reliance accounts for 3 percent of India's national economy, 12 percent of the nation's exports and has grown at a compounded annual rate of 25 percent for the last 15 years.
As India and its population of 1.1 billion people climbs in global prominence - due in part to annual GDP growth of 8-9 percent - Reliance will play an even larger role.
``We had been in a silent revolution for a long time,'' Meswani said. ``But people are aware of India now.''