The phrase that best describes the Indian plastics industry at the moment might be this: unrealized potential.
Unrealized because India's per capita use of plastics is still very low, less than half that of China and other emerging nations in Asia, and well behind the world average.
But with the country's plastics consumption set to double in five years, to more than 35 pounds per person, and with foreign and local firms making sizable investments, the word probably most uttered by executives at recent industry conferences in India was simply potential.
Carl Claerbout, president of rotational molder Dutchland Plastics Corp. in Oostburg, Wis., who was attending the Star Rotomoulding Conference in Mumbai in late January, compared India's plastics industry with the U.S. market of 30 years ago a boom period of opportunities for plastics through material conversions and end-market expansions.
Some of that growth will come from converting existing packaging to PET, according to Ichiro Mizuuchi, managing director of Nissei ASB's India subsidiary.
Nissei is investing $22 million to double the size of its blow molding factory in Mumbai.
Right now India uses PET in only about 20 percent of the applications in which it is used in the U.S. and Japan, Mizuuchi said.
The conversion to PET packaging in India will not move as quickly as it did in the U.S., only because India's average income remains very low, he said. (Forty percent of the world's poor live in India, according to Planet India, published in 2007 by Indian-American writer Mira Kamdar.)
But Mizuuchi cited huge potential from India's strong economic growth and an expanding middle class, harbingers of sizable increases in demand.
The country's rising automobile industry is another area where plastic materials will gain market share, according to executives of material suppliers Lanxess AG of Leverkusen, Germany, and DSM Engineering Plastics of Heerlen, Netherlands.
For example, roughly half of the air-intake manifolds in Indian cars are plastic, in contrast to the U.S., Germany and Japan where almost all of them are made of plastic, said Amlan Das, who heads the semicrstyalline business for Lanxess India Pvt. Ltd.
Lanxess' first plastics compounding plant in India an investment of around $14 million is scheduled to launch early next year in Jhagadia. To start, the plant will make Durethan polyamide and Pocan polybutylene terephthalate, mainly for auto applications.
The country's car market is about 2.4 million vehicles a year, Das said at Plastivision 2011, also held in Mumbai, Jan. 20-24. (Compare that with roughly 13.6 million passenger cars sold annually in China.) But the number of vehicles in India is expected to double by 2020, and could surpass the size of the U.S. market in 25 years, according to a recent report from global consulting firm Booz & Co. Inc. of New York.
Lanxess competitor DSM Engineering Plastics opened its compounding factory in Pune, India, in 2009 and is studying possible expansion, said Nitin Kothari, managing director of the DSM India unit.
It is not finalized yet. We will seriously look at it, Kothari
By world standards, India's consumption of commodity plastics remains low but is rising, according to industry estimates.
Mumbai-based Reliance Industries Ltd., the country's largest polypropylene producer by far, expects per capita PP usage to increase from 4.4 pounds to nearly 12 pounds by 2015.
Resin maker Borouge Pte. Ltd., based in Abu Dhabi, United Arab Emirites, is also looking at investing in compounding in India, said Gilles Rochas, vice president of the firm's film and molding unit.
The current Indian market for polyethylene is expected to double by 2014, as the country's infrastructure, automotive and food-packaging markets grow, Rochas said.
The market for higher-grade high density PE pipes, for example, has grown from about 11 million pounds five years ago to 77 million pounds today, said Chanchai Dasgupta, pipe applications marketing manager for Borouge (India) Pvt. Ltd. That's out of a total HDPE pipe market of about 485 million pounds, he said.
India does not have well-developed standards for HDPE pipe, and many companies will self-certify, Dasgupta said.
But the market is growing for better grades of pipes that meet valid standards, and it's to those markets that Borouge sells its materials, he said.
There's investment in many sectors of India's industry now, with much of it for local Indian domestic growth, rather than for export business, said Russell Tew, Bourouge marketing manager in Singapore.
In closures, we are amazed at the investment going in, he said. This is domestic market-driven, not export.