In this issue, we review the ebullient PlastIndia 23 event in New Delhi that again physically demonstrated the enthusiasm of the plastic and plastic packaging industry entrepreneurs. There was some discussion at the event by the large polymer suppliers and other players concerned about the latest amendment of the Indian government’s Plastic Waste Management Rules in February 2022, which lays out the schedule for Extended User Responsibility.
But by and large, the event overwhelmingly signaled the pent-up demand for capacity addition in an industry that continues to grow and which has been consistently adding capacity in the past four years. According to IppStar (www.ippstar.org), a large number of orders for stretch, cast, and blown film lines installed in the past four years have already doubled capacity in the country. These are likely to increase by another third from FY 2023-24 to 2026-27.
The industry has an opportunity to use these new lines for producing more easily recyclable films and laminates and this is what the polymer suppliers at PlastIndia were talking about. They are more hopeful than many of us because their entire existence depends on the acceptance of plastic as a material that will not further overwhelm the environment.
While there are several important industry and community efforts at collecting and sorting plastic waste in India, it is clear that the government will need to address its irresponsibility in not sorting out the chaos of municipal collection and landfills. In addition, or perhaps as a prelude, it will have to read its own Ministry of Forests and Environment February 2022 amendment to the Plastic Waste Management rules to enumerate and evaluate the registrations on its portal in the past year, and document the progress in EUR compliance.
Monocarton packaging over the past five years
From IppStar’s recent research of a cohort of Indian monocarton producers that we report on in this issue, it is clear that all segments of the Indian packaging industry are growing consistently, and at least nominally above the GDP growth rates. For a slightly more detailed analysis, readers can turn to page 48 for the full article. IppStar’s more general graph reproduced below illustrates a couple of things quite clearly.
Firstly, the packaging industry depends on GDP growth and particularly on consumer demand, which sank even before the pandemic – GDP growth was flagging in the financial year FY 19-20, which preceded the pandemic lockdown. Secondly, unlike GDP growth, the consumer product industry and hence, carton packaging (as reflected by our purposive sample) did not collapse during the pandemic but grew by about 4% in turnover while the Indian GDP declined by about 7%.
Lastly, the recovery in revenues of our sampled monocarton companies in FY 21-22 is slightly more than three times higher at 24%, than the GDP recovery of about 7.5%. However, the value of raw material consumption increased by 30% in the same year. The profitability of some of the companies in our sample will remain under pressure in the current year. The consumption demand scenario in FY 22-23 is by no means positive or certain. The just-announced Q3 FY 22-23 GDP growth figures are also fairly disappointing.
