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In the following article, Justyna Elliott, Senior Business Development Executive at the British Plastics Federation, writes exclusively for BP&R on the rising opportunities India presents to the UK plastics industry.
Recruitment for the largest plastics fair in India, Plastindia 2015, has recently opened. The event takes place every three years and UK firms may be interested in looking at opportunities for sales expansion and new business ventures in the market. The event attracts approximately 125,000 visitors, which provides an excellent opportunity to network with local buyers.
With a population of over 1.2 billion, of which 66 percent are in the working age group, and a GDP growth of nearly five percent in 2012 according to the World Bank, India offers significant opportunities for British exporters.
Overview of the plastics industry
The Indian plastics industry is growing at a rate of 13 percent p.a. according to Plastindia Foundation, the key Indian plastics trade association. Particular growth points are packaging, construction and infrastructure, electronics, transport, agriculture and consumer goods. Currently, the polymer consumption in India is approximately 8kg per person, an increase from 5kg in 2005. Given that the average European demand per capita currently reaches approximately 75kg, there is strong potential for further growth.
Nearly 25 percent of polymer consumed in India is in the construction sector, followed by flexible packaging and rigid packaging as the chart by AMI indicates (Fig.1)
The packaging sector in India consumes 9.7 million tonnes of polymer and is likely to triple in the next 10 years, according to Plastindia Foundation. This is due to a growth in the quantity of food sold packed, as well as pre-processed.
High demand for polymer material, machinery and goods are to a large extent met by imports. According to Plastindia Foundation in 2012/2013, the most imported material was PVC, at 1,135 KT, followed by LLDPE at 520 KT, HDPE at 455 KT, PP at 430 KT and EVA at 130 KT. In terms of the machinery, during the same period, 46 percent of equipment came from abroad, providing UK exporters with some interesting prospects. The majority of the processing equipment installed in India is injection moulding machines, followed by extrusion and blow moulding. In terms of the process capacity, however, extrusion generates the bulk of products manufactured, with about 19,000 KTs reported in 2012/2013 (Fig.2).
Despite a general growth tendency in the Indian plastics industry, local firms face the same challenges as most of their competitors abroad when it comes to finding skilled labour. There is a general shortage of skilled and trained workers, many of which come to UK Universities and other learning centres.
India is such a large and diverse market it cannot be seen as a whole and must be viewed as an assemblage of specific regions with their own unique customers and local competition. UK companies can certainly try to do their own market research, but in such a large territory may prove difficult. UK Trade & Investment offers part-funded, custom-made reports put together by their staff in the market. These OMIS (Overseas Market Introduction Service) reports, list local potential customers for particular products and potential business partners, and the staff can also line up meetings with potential customers.
Indian market entry modes
Some British companies may find it hard to navigate the legal and bureaucratic hurdles of doing business in India. Visiting Plastindia will help interested businesses meet competent and compatible people who could be potential agents. Networking with other UK firms, such as those on the BPF’s British pavilion at the event, can often lead to recommendations of agents who are already introducing complementary British products into the Indian marketplace. Plastindia attracts a large number of senior Indian decision makers and can be a good starting point to explore the possibilities of a joint venture.
Learning more about the market
The British Plastics Federation is organising a seminar, entitled ‘Opportunities in the Indian Plastics Market’ to be held on 20th June in its London office. It will feature presentations by the Plastindia Foundation and other industry experts. Alternatively, companies can visit one of the two major exhibitions in India: the upcoming Plastindia already mentioned, which will be held in New Delhi between 5th and 10th February 2015, or Plastivision, based in Mumbai, which is due to take place in January 2017. UK firms wishing to exhibit at Plastindia can apply for the Government grants of up to £3,000.