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December 19, 2011 01:00 AM

India auto sector promising for plastics

Satnam Singh
Correspondent
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    Indian OEMs currently use about 155 pounds of plastic per car, and that amount is expected to climb significantly, and possibly double, by 2016.

    “With the rising raw material cost and increasing pressure on OEMs to keep the car prices in check to remain competitive, the carmakers [will use more] plastic components in the years to come,” said Jayesh Rambhia, president of the All India Plastics Manufacturers' Association, during Automotive Plastics India 2011, held Nov. 24 in Mumbai.

    According to Rambhia, plastic content will rise from current levels to 240-300 pounds in the next five years. Volkswagen Group has already achieved the 300-pound level in its car range, he said. “The share of premium cars are still very low compared to Maruti Suzuki,” he said.

    China and the U.S. use 286 and 330 pounds of plastic per car, respectively, which shows the huge opportunity in India for plastic consumption in the rapidly growing automobile sector.

    Suppliers in the western India state of Gujarat will start manufacturing 1 million cars annually in the next five years, with global OEMs like Ford, Maruti Suzuki and Peugeot already announcing plans to set up production facilities in the state.

    “Automotive plastic component makers are setting up plants in a cluster to cater to these OEMs in Sanand, where most of the OEMs are setting up their plants,” Rambhia said.

    India is manufacturing around 17.6 billion pounds of plastics annually and the industry is growing at a rate of 15-20 percent.

    Recently, AIPMA signed a memorandum of understanding with Gujarat's government to set up a plastic cluster in an area of 200 acres in Dahej. Gujarat, already a powerhouse of plastics manufacturing, makes almost 20 percent of India's total.

    Another cluster of plastics manufacturers is forming at the Mundra Special Economic Zone, Rambhia said. Mundra is one of the biggest ports in Gujarat and OEMs are building up infrastructure there to ship cars overseas.

    R. Gopal Krishnan, director of Mumbai-based Tata Sons, spoke on the theme of “leap frogging” to take the industry to next level. He also compared India and China and the “headroom” available to India's automobile industry for growth. India has 12 cars per 1,000 people, whereas in countries like the U.S. have more than 500 cars per 1,000 persons, he said.

    Automobiles have assumed a place of prominence in Indian industry, which is currently producing 2.2 million passenger cars annually. That figure is expected to reach 10 million vehicles by 2020.

    Krishnan also highlighted that India's “Automotive Mission Plan 2006-2016” will contribute 10 percent of the country's gross domestic product by 2016. The turnover will reach $145 billion by 2016 from $33 billion in 2009, he said.

    Indian automobile manufacturers are focusing on innovations such as inline painting to match international standards. Certain techniques like thermoforming for exteriors and long-fiber-reinforced thermoplastics for replacement of metals are yet to take off in India and have phenomenal potential.

    Moreover, India's demography is relatively young compared with most developed countries. That particular segment looks for connectivity, USB ports, GPS and the like, which is putting pressure on carmakers to offer vehicles with luxury amenities at small-car prices.

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