The biggest challenge facing the Indian plastics industry might be keeping up with demand for its own products.
The nation's plastic packaging demand is set to double between 2007 and 2012, reaching 13.2 billion pounds, according to Kamal Nanavaty, president of the cracker and polymers sector for Reliance Industries Ltd., India's largest resin maker.
During that time, resin demand from building and construction alone will more than double to 5.5 billion pounds, Nanavaty said at the Plastics News Executive Forum, held March 10-12 in Tampa.
Just to keep up, India's plastic converters will need to invest $18 billion to add 26 billion pounds of capacity - creating annual capacity growth averaging 8 percent in the five-year period.
Injection molding and sheet extrusion will see investment of more than $9 billion from 2007-12, of which more than $5 billion will flow into packaging. Nanavaty said new capacities are especially needed in film and blow molding.
India also represents investment opportunities for plastics firms outside the region because of its lower capital and labor costs, said Nanavaty, whose company, Mumbai-based Reliance, sponsored a 29-person Indian delegation to the forum, to promote the country's market possibilities and foster discussions with potential partners.
Capital typically runs 30-50 percent lower in India than in more-developed nations, while labor can be 90 percent less expensive, he said.
Lower costs and low import duties already have attracted such U.S. firms as Samsonite Corp. The luggage maker entered India in 1997 and now the country generates $160 million in annual sales for the firm - or 15 percent of its global total. U.S. auto parts maker Visteon Corp. has grown to 12 plants in India in not quite 10 years, making parts for General Motors, Hyundai and India's own Tata.
The country's demographic profile compares favorably to that of China, Nanavaty said. Each nation boasts a population of more than 1 billion, but English-speaking India skews younger because of less-restrictive family policies.
``What's going to drive us forward are our young people,'' he said.
For its part, Reliance - which generates nearly 3 percent of India's total gross domestic product - is increasing oil exploration efforts, adding prodigious amounts of polypropylene capacity and expanding its line of retail stores. The firm opened 500 stores across the subcontinent between late 2006 and early 2008 and plans to increase its retail sales from less than $8 billion in 2005 to $50 billion in 2010.