Plastics are organic high polymers, consisting of large chainlike molecules containing carbon. They are formed when the short-chain molecules of chemicals and monomers are blended together by the process of polymerisation to form large chain-like molecules. Plastics are known for their light weight, anti-rust and good insulation properties and are increasingly becoming substitutes for major commodities such as metals, stones, wood, glass and cotton.
Plastics can exhibit a wide variety of properties from being flexible and soft, to rugged and hard. This is mainly due to the different types of polymers used in the manufacturing process. Polymers are categorised into thermoset, thermoplastics and elastomers.
Thermosets become permanently hard and rigid when heated or cured. Thermoplastics become soft when heated harden when cooled and hence, thermoplastic scraps can be reused and reprocessed through repeated melting and solidification by heating and cooling. Elastomers, also called synthetic rubber are polymers that have the elastic properties of natural rubber. Depending on the type of polymer used in the manufacturing of plastic, the characteristics of the end product vary. The following key segments that form the main constituents of the plastics industry are:
• Polymers
• Performance plastics
The plastic industry of India has a big market potentiality and is gradually prospering. This potentiality of the market will surely actuate the entrepreneurs to invest in this industry. Entrepreneurs are trying to provide high quality plastic products, so that it becomes a booming industry.
The potentiality of plastic industry India propels other associated industries to grow side by side. One of such growing industry is petrochemical industry. Both these industries are reciprocal to each other. The petrochemical industry facilitates the plastic industry to produce plastic products that will meet the domestic demand as well as that of the overseas market.
The plastic processing industry consist of over 30,000 units which are producing a wide range of plastic products through the process of injection moulding, then blow moulding, extrusion, and finally calendaring. Some of the common markets, where plastic products are used are:
End user markets: These are the plastic products basically used for domestic purposes. Some of the end user plastic products are plastic balls, plastic bags, polypropylene bags, polyethylene bags, plastic barrels, plastic caps, plastic bottles, plastic baskets, plastic basins, plastic basins, plastic bowls.
Appliances: These are basically the plastic mechanical components like plastic bearings, plastic bellows, plastic belting etc.
Some other industries, where plastic materials are used are automotive, building & construction, electrical and electronics, industrial, medical, packaging, transportation etc.
The government of India is trying to set up the economic reforms to elevate and boost the plastic industry by joint venturing, foreign investments.
Plastic industry India symbolizing a promising industry and at the same time creating new employment opportunities for the people of India. The per capita consumption of plastic products in India is growing and is moving towards 8% GDP growth.
The Indian plastic industry is highly fragmented with an estimate of around 25,000 firms and over 400,000 employees. The top 100 players of Indian plastic industry account for just 20% of the industry turnover. Barring 10 to 15% of the firms that can be categorized as medium scale enterprises, most of the units operate on a small – scale basis.
Indian plastic industry has made significant achievements in the country ever since it made a promising beginning with the start of production of polystyrene in 1957. The industry is growing at a rapid pace and the per capita consumption of plastics in the country has increased several times as compared to the earlier decade.
The immense potential of Indian plastic industry has motivated Indian manufacturers to acquire technical expertise, achieve superior quality standards and build capacities in different facets of the booming plastic industry. Substantial developments in the plastic machinery sector coupled with matching developments in the petrochemical sector, both of which support the plastic processing industry, have facilitated the plastic processors to develop capacities to cater both the domestic as well as overseas exports.
The Indian plastic industry has taken great strides. In the last few decades, the industry has grown to the status of a leading sector in the country with a sizable base. The material is gaining notable importance in different spheres of activity and the per capita consumption is increasing at a fast pace. Continuous advancements and developments in polymer technology, processing machineries, expertise, and cost effective manufacturing is fast replacing the typical materials in different segments with plastics.
On the basis of value added, share of India's plastic products industry is about 0.5% of India's GDP. The export of plastic products also yields about 1% of the country's exports. The sector has a large presence of small scale companies in the industry, which account for more than 50% turnover of the industry and provides employment to an estimate of about 0.4 million people in the country. Approximately Rs 100 billion are invested in the form of fixed assets in the plastic processing industry.
The Indian plastics industry comprises around 55,000 plastic processing units, spread over both the organised and unorganised sectors, employing an estimated 0.4 million people. About 75 per cent of plastic processing units are in the small-scale sector and these account for about 25 per cent of the total production. There are about 2000 fibre processors, of which 80 per cent are in the smallscale sector. Globally the degree of fragmentation is large and despite the small size of operations of the players, they are able to operate profitably.
More than 95 per cent of firms in the Indian plastics industry operate in the form of partnership, proprietorship or as private limited companies. The key organised sector players include VIP Industries, Nilkamal Plastics Limited and Supreme Industries Limited.
Indian trade was impacted by the global recession of 2007-2009. Indian exports fell from $200.9 billion in 2008 to $165 billion in 2009. India ranked 22nd in the world in terms of export volume.
Being a country with a huge workforce, India has seen its trade being boosted by the production of precious stones and metals. The various other export commodities that India exports are:
Petroleum products
Machinery
Iron and steel
Chemicals
Vehicles
Apparel
India’s main export partners are:
UAE
US
China
Singapore
The following graph shows how the above countries have contributed to the total volume:
In the calendar year 2006, the value of world plastic export was US$ 375 billion. However the share of India was less than 1 % with exports of worth US$ 3.187 billion. The percentage of growth in export was 21 %. During this trend of growth in exports, the export of plastics raw material increased from 55 % to 60 % of the total export of plastic goods, while the export of processed plastic goods has registered a negative growth from 45 % to 9 %. According to recent reports, the industry is said to be losing an opportunity of USD 300 million through value addition on the raw materials that are exported.
USA
UAE
Italy
UK
Belgium
Germany
Singapore
Saudi Arabia
China
Hong Kong
The Indian plastic exports were valued at about US$ 532 million during FY 2004 (1st half FY2005 exports US $ 295 million). With significant capacity additions leading to over-capacity in domestic markets during FY2001 and beyond, polymer exports have increased considerably. However, due to the lower competitiveness of the plastic products industry, polymers have been exported directly.
1. Plastic injection moulds.
2. Compression moulds
3. Investment die casting moulds
4. Blow moulds
5. Pressure die casting moulds.
In the automobile, home-appliances, engineering, oil and paint, refrigerator, irrigation and lighting applications.
Process % Share in Total
Consumption in India
Extrusion 75.6
Injection Moulding 18.0
Blow Moulding 5.1
Rotomoulding 1.3
Total (‘000 tonnes) 4,070
Polymers are processed in a number of ways, to arrive at the end products. The different types of processing include:
• Extrusion – Typical extruded products include films, sheets, piles and filaments
• Injection moulding – This is largely used for industrial applications and making moulded luggage
• Blow moulding – Bottles, containers, toys, etc, are manufactured using the blow moulding process
• Roto moulding – Large circular containers such as water tanks are made using this process
High intensity mixers offer a series of mixers especially for master batch manufacturing. In addition to PVC compounding, powder coating, coloring, granulating, homogenizing, size reduction, dispersing, pulverizing, sintering, drying, toner manufacturing etc. These mixers are proven to manufacture masterbatch from maximum different components (pulverized polymers, wax, lubricants, processing aids etc.), which are heated upto 70 to 130 degree Celsius with frictional heat. The perfect mixing tool, suitable for specific product requirement, is incorporated to gentle and efficient mixing process through optimization of the flow relation within the mixer.
In India there is no duty laid on the export of High Speed/Intensity Mixers. The country I have selected to export is Bangladesh. There is a 20% import duty on High Intensity Mixers at Bangladesh. In India the government is supporting the plastic industry as a whole and the reasons for them have been explained above, that is owing to the tremendous growth and potential of this industry in India. Today the consumption of plastic in India is calculated to be approximately 1kg per person which is assumed to rise by 10kg per person by the year 2012.
Plastic is the substitute to Metal, Wood and other such commodities which are very costly in comparison to plastic. The plastic manufacturers get a subsidy of DEPB license against export done which comes to around 11 to 13% value of the sale and thus the plastic machinery manufacturers are benefitted with it.
A. Plastics & Articles thereof, not elsewhere specified.
(a) When CENVAT facility has not been availed
Rs.8.00 per kg.
3.00
5.00
(b) When CENVAT facility has been availed
Rs.3.00 per kg
All customs
(a) When CENVAT facility has not been availed
Rs.4.00 per kg
2.00
2.00
(b) When CENVAT facility has been availed
Rs.2.00 per kg
All customs
(a)When CENVAT facility has not been availed
Rs.4.50 per kg.
All C.Excise
(a) when CENVAT facility has not been availed
Rs.7.50 per kg.
All C.Excise
(a) When CENVAT facility has not been availed
Rs.19.00 per kg.
9.50
9.50
(b) When CENVAT facility has been availed.
Rs.9.50 per kg.
All Customs
(a) When CENVAT facility has not been availed
Rs.15.00 per kg.
4.00
11.00
(b) When CENVAT facility has been availed
Rs.4.00 per kg.
All Customs
(a) CENVAT facility has not been availed.
Rs.6.00 per kg.
All C.Excise
when CENVAT facility has not been availed
Rs.7.00 per kg.
All C.Excise
when CENVAT facility has not been availed.
Rs 4.50 per kg.
All C.Excise
(a) when CENVAT facility has not been availed
Rs.1.20 per kg.
All C.Excise
(a) Flexible, when CENVAT facility has not been availed
Rs.5.50 per kg.
All C.Excise
(b) Rigid PVC Pipes/conduits and accessories of pipes(Rigid) when CENVAT facility has been not availed
Rs.8.50 per kg.
All C.Excise
(c) Rigid other than (b) above, when CENVAT facility has not been availed
Rs.8.00 per kg.
All C.Excise
when CENVAT facility has not been availed.
Rs.60.00 per kg.
All C. Excise
(a) when CENVAT facility has not been availed.
Rs.9.00 per kg.
All C.Excise
Rs.70.00 per kg.
All C.Excise
Rs.17.00 per kg.
All C.Excise
Rs.28.00 per kg.
All Customs
B. PVC Transparent Hose when
Rs.6.00 per kg.
All Customs
CENVAT facility has not been availed.
C. Woven sacks and bags made of plastic materials other than reinforced plastics
(a) when CENVAT facility has been not availed
Rs 18.00 per kg. of net weight of export product.
12.00
6.00
when CENVAT facility has been availed.
Rs. 12.00 per kg of net weight of export product.
All Customs
D. Insulated Ware mainly made of plastics.
3% of fob value
All C. Excise
E. Fabrics Tarpaulines and other made up articles made of plastic materials (other than reinforced plastic articles) covered under Ch.39 of theSchedule to the central
Excise Tariff act 1985.
(a)when CENVAT facility has not been availed
Rs.18.00 per k.g on net weight of the product
12.00
6.00
(b) When CENVAT facility has been availed
Rs.12 per k.g of net weight of the export product
All
customs
Jumbo bags/Box bags/flexible Intermediatebulk Containers (FIBC) made of plastic materials other than reinforced plastic
(a) When CENVAT facility has not been availed
Rs.23.00 per k.g of net weight of export product
16.00
7.00
(b) When CENVAT facility has been availed
Rs.16.00 per k.g of net weight of export product
All
Customs
As known, there are many models of these mixers and thus the requirement is based from company to company and product to product. Similarly the pricing is an issue which depends from model to model. In India the models that are manufactured generally range from Rs. 2 lakh to Rs. 2 crores. In India there are approximately 15-18 different types of such models which are manufactured and sold locally as well as exported worldwide.
The machines that are supplied to Bangladesh are generally in the range of Rs. 2 lakh to Rs. 1.5 crores. The foreign market dealings for this product was initially done in dollars but now as the dollar fluctuates a lot, Euros are a more popular medium of dealing with foreign countries for exports.
Plastic Industries of Bangladesh are mainly engaged in manufacture of different products like PVC pipe, Garments accessories, Hanger, poly bag, Polythene bag, and leather, plastic household products, Jute and Textile spares Toys, plastic waste recycling, computer Accessories, auto lighting, plastic Furniture, Poly Propylene woven, Flexible packaging and many. Total resin import in 2005 was 5,40,000 tons and per capita plastic consumption is 3.4 Kgs. Import of plastic resin is increasing by 10% per annum. For export government provides duty free import of raw materials. Plastic goods are mainly exporting to USA, CANADA, UK, JAPAN, AUSTRALIA, FRANCE etc.
Investment Policy of Bangladesh is free and open for foreign investment. Bangladesh gives most attraction Packages of FDI. Countries export growth is 22% in 2006 for all products whereas the national GDP growth was 6.71%.
No matter what race or religion a Bangladeshi belongs to, they have coexisted peacefully for thousand years. It is the friendliest country for investors, with trainable, enthusiastic, diligent and inexpensive labors. It is suitable for development of labor-intensive industries.
The sea and aerial transportation is very convenient hence it is an ideal site of international trade. Although the GDP is still low, but the most important is that there are many middle bourgeoisie who have certain purchasing power. Following the step of economic development, they have become stronger and more competitive. Thus it is an important consumptive market which full of business opportunities.
Bangladesh government is keen on participation of foreign investment for stimulating production and economic growth. Since 1990, the government has announced a number of incentives such as tax holidays, unhindered repatriation of profits, withdrawal of non-tariff barriers in all aspects and duty-free import of capital machinery by export-oriented industries. Bangladesh has been experiencing a major paradigm shift towards industrialization. Gradually, it is transforming towards a more competitive destination for foreign investment.
A vast majority (98 percent) of the people of Bangladesh are Bengalis and they speak the Bengali language. Minorities include Biharis numbering 250,000 and other tribes numbering about a million, with the Chakma being most numerous in number. About 83 percent of Bangladeshis are profess Islam as their religion. The next major religion is Hinduism (16 precent). Other major religions include Buddhism and Christianity.
East Bengal--the region that was to become East Pakistan and now Bangladesh -- was a prosperous region of South Asia until modern times. It had the advantages of a mild, almost tropical climate, fertile soil, ample water, and an abundance of fish, wildlife, and fruit. The standard of living compared favorably with other parts of South Asia. As early as the thirteenth century, the region was developing as an agrarian economy. It was not entirely without commercial centers, and Dhaka in particular grew into an important entrepôt during the Mughal Empire. The British, however, on their arrival in the early seventeenth century, chose to develop Calcutta as their commercial and administrative center in South Asia. The development of East Bengal was thereafter limited to agriculture. The colonial infrastructure of the eighteenth and nineteenth centuries reinforced East Bengal's function as the primary producer--chiefly of rice and jute--for processors and traders in Calcutta and beyond.
The partition of British India and the emergence of India and Pakistan in 1947 severely disrupted the former colonial economic system that had preserved East Bengal (now East Pakistan) as a producer of jute and rice for the urban industrial economy around Calcutta. East Pakistan had to build a new industrial base and modernize agriculture in the midst of a population explosion. Pakistan's five-year plans opted for a development strategy based on industrialization, but the major share of the development budget went to West Pakistan, that is, contemporary Pakistan. Blame was placed by various observers on the West Pakistani leaders who not only dominated the government but also most of the fledgling industries in East Pakistan. More information about the economic exploitation is available.
Post Independence Bangladesh had to face the devastation wrought by earlier economic exploitation during the Pakistan era as well as destruction of critical infrastructure during the war. After many years of economic problems, Bangladesh has started to rebound with steady growth in recent years.
The export method used for plastic machinery is generally only Business to Business. There are not many trade houses. There is a tendency in this business that the employees in a certain manufacturing unit would establish himself as agent and get orders for the company.
There are a few industry associations in India which help the plastic industry as a whole.
AIPMA House, A-52, Street No. 1, M.I.D.C.,
Marol, Andheri (E), Mumbai - 400093, India
http://www.aipma.net/
Plastic machineries are promoted or can be promoted by the following marketing activities or promotional measure:
Newsletters to potential buyers
Websites
Product listing on major internet search engines
Advertisement in magazines (Modern Plastic Worldwide – 2.5lakh copies of this magazine are distributed)
Exhibitions
Trade Fairs
Polymers production in India has been growing at a CAGR of 5.4 per cent between 2001-02 and 2006-07 from 3.9 million tonnes to 5.2 million tonnes, respectively. Performance plastics have been growing, at a CAGR of 8 per cent during the same period. Consumption of polymers in India closely matches production, however in performance the consumption of plastics exceeds domestic production the gap being addressed through imports.
Exports of polymers from India form a small percentage of overall consumption. However, polymer exports have been growing from 5,67,900 tonnes in 2001-02 to 6,94,700 tonnes in 2005-06, CAGR of 5 per cent. Exports of performance plastics have grown more rapidly from just 944 tonnes in 2001-02 to 4,550 tonnes in 2005-06, at a CAGR of close to 50 per cent.
The per capita consumption of plastics in India is very low, at about 4 kilograms per year. The USA and China have an average consumption at 120 kilograms and 17 kilograms, respectively. The world average in per capita consumption of plastics is 25 kilograms per year. Hence, there is significant potential for growth in plastics consumption in India. It is expected that the consumption will nearly double, to about 12 million tonnes by 2010.
Plastics find application in a wide range of products, in industrial and agricultural applications and consumer use. Hence, the demand for plastics depends largely on growth in user segments and overall macro-economic growth. It has been seen that the consumption of polymers is closely linked to the economic development of a country. In this respect, plastics are similar to rubber and driven by the same factors.
Some key drivers for the plastics industry include:
1. Growth in industrial production/manufacturing, especially in consumer durables and automotive sectors, which are key consumers of plastics;
2. Growth in income levels and demographic shifts, leading to increased consumption of plastic products.
The Government of India has been playing a proactive role in supporting the plastics industry. The Task Force on Petrochemicals has envisioned the following:
• Development of value-added, quality petrochemical products at globally competitive prices using eco-friendly processes and technologies.
• Innovation of newer applications and products with focus on sustainable development.
Thrust areas for the plastics industry include, modern farming through plasticulture, packaging for processed foods and consumer non-durables, better performing plastics for automobiles and consumer durables, infrastructure development through cost effective plastics and innovative products for telecommunications and information technology services sector.
The Indian government has reserved certain categories of plastic products for Small-Scale Industries (SSI). The small-scale sector accounts for more than 50 per cent of the plastic industry turnover. Some of the key products reserved include soap cases, buckets, cups, water jugs, plastic cane, mugs, flexible PUF products, PS foam products upto 110 mm diameter, PVC pipes, rain coats, polyester sheets, thermo welded plastic products, monofilaments and tubular PP films. Typically these are relatively lowtechnology, low-cost items. Most high-end plastic products are not reserved.
Plastics find application in a very wide range of user segments, each with its own characteristics and dynamics. Plastics manufacturers need to identify segments and products that align with their own strategy and capabilities. For example, if the manufacturer has invested significantly in capital equipment, say moulding machines, the product mix needs to ensure there is consistent high volume demand so that the machines are fully utilised.
This is a key requirement for organised players to address consumer markets. Given the high number of units producing similar products in the industry, it is important to have a strong brand that will differentiate the product and influence customer mind-set. For example, VIP in moulded luggage and Nilkamal in moulded furniture are well-known brands and are therefore able to attract customers through their brand strength.
Nearly 63 per cent of costs for plastics processing go towards raw materials. Hence, it is important for manufacturers to continuously improve productivity and reduce waste, so as to safeguard margins amid increasing competition.
More than 85 per cent of the conversion cost (difference between the value of finished good sales and the raw material costs) is fixed in nature. This implies that a larger scale of operations would yield economies of scale. For manufacturers not covered under the SSI policy, it is important to look for avenues to grow operations and scale up and at the same time control costs.
The consumption patterns change with time and new end uses keep evolving. For instance, the Kerala Government, has enforced a ban on plastic items such as, carry bags, glasses and cups, in view of harm to the environment and public health. The players need to keep themselves abreast of such changes, as these would directly affect demand in particular geographies. At the same time players also need to upgrade their processes to reduce harm to the environment and public health.
The plastics industry offers several opportunities for growth, as most of the user segments such as auto components, consumer durables and telecom are growing rapidly. Growth in food & beverage and FMCG segments offer significant opportunities in packaging. Another avenue for potential investors could be plastics processing machinery. As the industry grows further and aims at improving productivity and adopting new technology, there will be an increase in the demand for modern processing machinery. It has been estimated that the industry will need nearly 30,000 new machines over the next three years.
Plastic sector is fragmented in structure, but for a few large players in the organised sector. However, the sector is getting increasingly aligned with global market developments. This is the focus sector and the Government is actively involved in devising plans to support growth. Significant progress has been made post the Tenth Five- Year Plan since more thrust was provided on processing and marketing.
With India poised to emerge as the third largest consumer of plastics by 2010 and the industry growing at a rapid pace, the players need to gear up along with Government support, to take advantage of the new opportunities offered by the sector.
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