The U.S. plastics industry may be expecting a slight decline in 2008 sales, but American officials attending PlastIndia in New Delhi were trying to look past that and focus on a bright spot the sharp rise in trade between the plastics sectors in the two countries.
While final figures still are being tallied, 2008 is likely to see bilateral plastics industry trade between the United States and India rise about 33 percent to US$900 million, led by American exports hitting $550 million, a jump of more than 35 percent from 2007.
That's just a tiny piece of the $374 billion U.S. plastics industry, but that growth in trade prompted a gathering of U.S. and Indian business executives to meet Feb. 5 in New Delhi and compare notes on how to advance economic ties.
Given the expectation that demand for plastics will double in the next three years [in India], I don't know how you cannot be extremely hopeful that the U.S. and Indian plastics industries will increase their trade over the short term, and certainly over the long term, said Neil Pratt, senior director of international trade for the Society of the Plastics Industry Inc.
Pratt was one of several speakers at the India-U.S. Plastics Industry Summit 2009, organized by Washington-based SPI, the PlastIndia Foundation and the Confederation of Indian Industries, both of New Delhi. The event was held in conjunction with the PlastIndia trade show, held Feb. 4-9.
Plastics trade between the countries stood at just $200 million in 2001, but since then it has risen steadily, according to SPI figures.
Pratt said the 2008 India trade data mirrors a global trend for the U.S. industry: Exports are growing, even as the industry faces a decline in its overall gross domestic product.
U.S. plastics exports worldwide rose 11.6 percent through November, for a plastics trade surplus of $12.2 billion, he said.
In the case of India, resins account for about 70 percent of U.S. exports, while plastic products are just less than 25 percent. Machinery is not quite 5 percent, and molds are negligible, according to SPI figures.
For Indian exports to the U.S., the breakout was somewhat reversed: About 60 percent of India's $277 million in 2007 exports to the U.S. were plastic products, resins accounted for about 32 percent and machinery and molds made up the remainder.
Indian executives at the New Delhi event also were pushing stronger ties.
Kamal Nanavaty, president of the polymers and chemicals sector at Mumbai-based resin giant Reliance Industries Ltd., said U.S. companies should look at India in terms of its 1.1 billion potential customers in a market that has been slower to start than the other giant in the developing world, China.
India is just at the beginning of the takeoff, and as our per-capita GDP increases, the consumption of plastic is bound to increase, he said.
India uses about 11 pounds of plastics per person, while China uses 63.8 pounds. Per-capita use in the U.S. is nearly 240 pounds, he said.
Indian speakers at summit said they believe their country has long-term advantages over China, such as stronger legal institutions and a stable democratic government.
Nanavaty said India has a rising population of young people and that, by 2015, a higher percentage of the country's population will be in its workforce compared with China factors that will promote long-term growth.
But he also admitted that one of India's biggest disadvantages is its poor infrastructure, such as its roads and ports: We still have a long way to go on improving infrastructure, but hopefully this will happen, Nanavaty said.
Since 2006, India has been creating special economic zones for export-oriented business, offering tax breaks and better infrastructure, according to a speaker from the Indian government. Lalit Singhal, director general for India's Export Promotion Council, said the country's previous export zones suffered from too much bureaucracy but the current version is significantly streamlined.
He said 87 zones around India have begun operating, with $22 billion in investments and employing 62,000.
Several speakers, including Nanavaty, said the summit attracted fewer U.S. firms than they were expecting. The crowd mainly comprised Indian companies. But an official from the U.S. Embassy in India said U.S. firms have been coming in large numbers to India, particularly in sectors with long-term opportunities, like nuclear power and military aerospace.
The U.S. machine tool sector and the woodworking machinery industry recently have opened offices in India, said Carmine D'Aloisio, commercial affairs counselor for the U.S. Embassy.
While we've had a smaller American presence at the [PlastIndia] show than we would have liked, we have had a lot of interest from U.S. firms, he said. We've seen a bit of a decline in visits across all industries because of the U.S. financial crisis.
Secondly, the Mumbai terror attacks had a chilling impact, but that was temporary, D'Aloisio added.