India's small and midsized plastics producers are upgrading to be globally competitive in two to three years and to keep up with industry majors in the international league, said Ashok Goel, the president of the next PlastIndia — which will take place in 2012 in New Delhi.
Thanks to domestic demand, the Indian plastics industry has weathered the global economic storm. But government and industry efforts are under way to help companies become integrated global players, especially under the trade flexibility of bilateral and multilateral free-trade agreements, said Goel, who also is managing director of Essel Propack Ltd., a Mumbai-based maker of plastic tubes, caps and closures.
Last year, the Indian government provided credit to help prop up industries during the global financial crisis, cushioning its impact, Goel said in a recent interview in Mumbai.
As well, the country's plastics industry has been taking its own measures to optimize resources, increase productivity and improve supply-chain management. Family-owned processors have been consolidating and upgrading, knowing that, otherwise, global and borderless competition could lead to their elimination.
“The Indian plastic industry has to shed its [small and medium-sized enterprise] character and get into a size where economy of scale will help them to be globally competitive,” he said. “This will happen only if we bring system and global practices in place and attract talents to build competence across the industry.”
Having a huge domestic market is good but not sufficient, said Goel, who also serves on the executive committee of the industry's umbrella trade group, the Organization of Plastics Processors of India.
Free-trade agreements have benefited the industry in technology and manufacturing processes, but such pacts will lead to global competitiveness only if they benefit all parties.
He noted that China exports large quantities of plastic goods into India, and the retail selling prices of these goods sometimes don't even cover basic raw materials costs.
“Some trade practices are not conducive to fair business play,” Goel said, adding that the problem could lie either with the exporter or the importer. But, he said, “the answer lies in the fair implementation of [free-trade agreements] with proper checks and balances.”
In technology, the plastics industry in India is ratcheting up to equal the West, primarily in machine building, Goel said. Indian machinery makers can offer global partners the benefit of lower-cost manufacturing and a domestic market that is growing in its demand for more-sophisticated technology.
Indian firms need better-quality manufacturing processes and benchmarking to help them face future challenges, and he expects the technology hounds and next generation of entrepreneurs to close the gap.
As for exports, India has carved out a niche in India-friendly African markets, which are growing at a good pace but can expect rising competition from the Middle East and China, he said.
