Sometimes in emerging economies, you need to be skeptical of the hype. Some new data out of India and its injection molding machinery market are a good example.
In 2012, the Indian industry predicted that by 2020, it would need 15,000 more molding machines a year.
The reality so far has gone in the opposite direction and doesn't seem like it will get anywhere near 15,000 in the next four years.
When that projection was made in 2012, India's machinery market was about 3,600 injection presses a year.
It dropped to 2,700 machines in the 2013-14 fiscal year, as the economy hit turbulence. (India's fiscal years run from April 1 to March 31).
So India's plastics machinery demand would have to grow four or five times larger in the next few years to meet the 2012 projections, which now look too optimistic.
This set of data comes from a Jan. 7 report by the Indian Ministry of Commerce and Industry, explaining why it was putting high tariffs on imported molding machines from four Asian countries. It put similar tariffs on Chinese machines in 2009.
The 15,000 machines per year estimate came directly from industry projections, the Indian government said.
But because actual demand was not on the path to meet the 2012 estimates, India's domestic injection molding machinery industry lobbied its government to put up higher tariffs on imported machines from Taiwan and three other Asian nations.
And the government agreed, as we've written about.
You hear a lot of talk in India about fast growth. At last year's Plastindia show, various industry groups were estimating that India will double its per capita use of plastics in the country by 2020, giving it about 20 kilograms of plastic used per person annually.
Twenty kgs by 2020, was the refrain. It has a nice ring to it, almost poetic, if you can say that about plastic consumption data.
But given the track record with the machinery data, I wonder if that will also prove a rosy scenario analysis.
Indian economic projections often look impressive. An official report from the industry trade groups, also given out at the Plastindia show last year, continued to predict strong growth in the molding machine market.
It said injection machine demand would be 7,200 machines in 2017-18, and 14,500 in 2023-24. I'm not sure how, or if, those 2015 estimates adjusted for the realities noted in the government report.
So I wonder if India will really hit 7,000 machines by 2018, or 20 kg of plastic per person by 2020.
That's not to say India won't grow. It remains one of the world's fastest growing major economies, with long-term potential, although there are calls for Prime Minister Modi to do more to make good on his reform agenda, with one headline calling this a “make or break year” for Modi's development agenda.
Other emerging economies, like Brazil, have also not met expectations the last few years. India's not alone in that.
Given the volatile world economy slower growth should be expected, but India has some large gaps between earlier projections and how things are really shaping up.