Mumbai — India's flexible packaging industry anticipates strong growth but remains challenged by negative perceptions about the use of plastics.
At least that was the feeling at a recent industry conference in Mumbai, where several executives called for building bigger networks to recycle and properly dispose of packaging as part of the Indian government's Swachh Bharat, or Clean India, campaign.
“There should be an efficient system of waste recycling starting from rag pickers, collection, segregation, to recycling centers, with the active involvement of end users to make Swachh Bharat,” said Amit Ray, president and CEO of the flexible packaging business of film producer Uflex Ltd.
Delegates at the Speciality Films & Flexible Packaging Conference, held Sept. 15-16 in Mumbai, heard that the county's flexible packaging market is growing 14 percent a year, currently accounts for 24 percent of the consumer packaging market, and is expected to be a $32 billion industry in 2020.
The key growth drivers are robust economic growth, more than 350 million people between the ages of 10 and 24 and a growing urban population, said Wim Roels, CEO of Borouge Pte. Ltd., the Singapore-based marketing arm of polyolefin supplier Borouge.
Roels told the conference that he also feels that an efficient disposal of waste is required, in keeping with the industry's growth: “Littering is a major issue and India should build a recycling infrastructure.”
India's consumption of polyolefins for film and sheet is projected to increase from 2.5 million metric tons in 2014 to 4.2 million tons in 2020, an average annual growth rate of 9.4 percent. The two fastest growing areas are in lamination for food packaging and shrink film.
“The Indian packaging industry is moving to the next level due to the entry of global players via acquisitions,” Roels said. “Major international film producers are increasingly acquiring producers in India, pushing standards even higher.”
One executive said that packaging has a massive upside in the country because basic household items like flour, rice, sugar and tea are still being sold unpackaged in the country's interior, where organized retailing has yet to make its presence felt.
“Merely 5 percent are sold in packaged form and the majority — 95 percent — are unpackaged,” said Pradeep Tyle, senior president and CEO of the global film business at Uflex, which is based in Noida, outside New Delhi.
He said India does not lag in technology but market penetration is still low: “Among the major changes are that the selling of commodities is shifting from small shops to hypermarkets and that is bringing major opportunity for the packaging industry.”
Extrusion machinery maker Rajoo Engineers Ltd. is setting up a development center for barrier films research in Gujarat in March, hoping to expand that market in India from primarily edible oil packaging to other foods.
“The center would showcase the application of barrier films beyond edible oil packaging,” said Rajoo President Sunil Jain. “It would also provide services like skill development and training, development of barrier packaging material and raw material testing.”
Another challenge for the barrier film industry is the small packaging size in rural India, where people prefer to buy edible oil or masala packs for one-time use.
“It is a real challenge for the packaging industry to introduce barriers in the smaller pack sizes for the rural sector, which has huge untapped potential,” said Vaibhav Tandon, a director of Pepsico India. “The challenge is to minimize the wastage and provide the right quantity and dosage for one-time use.”
One indication of growth potential may be in the sales of Daman, India-based converter AVI Global Plast Pvt. Ltd. in Mumbai.
Since it started in 2003, sales have grown from 10 crore rupees ($2.5 million) to 180 crore ($30 million) in its last fiscal year.
The company has one plant with six production lines, including three PVC sheet lines and one PET sheet line. It plans to add an additional PET line next year to meet growing domestic demand, said Vice President Ankit Bhargawa.
Its export business has been slightly impacted by the recent depreciation of the Chinese yuan, he said in an interview.
“The big leap in our business is a direct reflection of growth in the Indian packaging industry,” Bhargawa said. “The marginal affect is in the export market, our domestic growth is intact.”
Executives said other major challenges include the fragmented nature of the flexible packaging market, overcapacity and legislation that bans or restricts plastic, including one draft law that would require multilayered packaging for commodities to switch over to plastic which is recyclable or compostable.