Supply Plus Pragati Maidan 2016

• India is the world's 2nd largest producer of food next to China
• It is the 2nd largest vegetable and 3rd largest fruit producer in the world
• The growth of food processing sector has nearly doubled to 13.7 per cent during the last four years.
• It ranks second only to Japan in inland sector fish production and produces about 6.57 million metric tonne fish every year.
• Of the world's total annual spice trade of 850,000 tonnes, India accounts for 44 per cent in quantity and 36 per cent in value
• The beer market in India is pegged around 12 million hectoliters.
• Functional foods had the market earned revenues of over $ 185 million in 2007 and this is expected to reach $ 1,161 million in 2012.
• Factors instrumental in driving growth and investment (FDI) in the Indian food industry are:
  Effective distribution network and supply chain
  Product range that is customized to suit local market requirements
  Superior processing technology
  Brand building and marketing

• The sector is growing at a rate of over 13 per cent annually.
• The sector is estimated to be worth $ 6 billion.
• Indian pharmaceutical industry ranks 4th in terms of volume (with an 8 per cent share in global sales) globally.
• In terms of value it ranks 13th (with a share of 1 per cent in global sales) and produces 20-24 per cent of the world's generic drugs (in terms of value).
• India is one of the top five active pharmaceutical ingredients (API) producers (with a share of about 6.5 per cent).
• The industry is in the front rank of India's science-based industries with wide ranging capabilities in the complex field of drug manufacture and technology.
• Indian pharmaceutical companies supply almost all the country's demand for formulations and nearly 70 per cent of demand for bulk drugs.
• Indian pharmaceutical market is a $ 7.3 billion opportunity with the domestic retail market expected to cross the $ 10 billion mark in 2010 and be worth an estimated $ 12-13 billion in 2012.
• The industry ranks 17th with respect to exports value of bulk actives and dosage.
• During April 2000 to October 2007, drugs and pharmaceuticals are the tenth largest FDI-attracting sectors in India.
• Factors making the Indian pharmaceuticals an industry to reckon with are:
  Self-reliance- displayed by the production of 70 per cent of bulk drugs and almost the entire requirement of formulations within the country
• India has the largest number of FDA-approved manufacturing plants outside the US. The country has close to 100 such units.
• Low cost of production
• Low R&D costs
• Innovative scientific manpower
• Strength of National Laboratories
• Increased outsourcing of manufacturing processes to India with supported clinical trials

• India’s logistics sector attracted investments worth Rs. 23,200 crore in first half of 2008.
• It outclassed some of the major sectors including aviation (Rs 20,890 crore), metals and mining (Rs 8500 crore) and consumer durables (Rs 6000 crore) among others.
• Mumbai has emerged as the preferred location for the development of logistics parks with an investment of approximately $ 200 million.
• The development of seven to eight logistics parks are in pipeline on 600 acres around Mumbai.
• A large number of upcoming SEZs have necessitated the development of logistics for the domestic market as well as for global trade.
• Indian logistics industry is expected to grow annually at the rate of 15- 20 percent, reaching revenues of approximately $ 385 bn by 2015.
• Market share of organised logistics players is also expected to double to approximately 12 percent during the same period.
• About 110 logistics parks spread over approximately 3,500 acres at an estimated cost of $1 bn are expected to be operational and an estimated 45 mn ft2 of warehousing space with an investment of $ 500 mn is expected to be developed by various logistics companies by 2012.

Bulk Packaging

The Indian bulk packaging market started moving significantly only in the 1990s as the industries acquired bulk handling capabilities to compete in the globalised world. The markets really took off at the turn of the new millennium spurred by an export led and domestic growth in the agro produce & food; bulk drugs & generics; chemicals & pesticides and Petroleum & lubricants. The market grew at around 28% for the first 6-7 years and then settled down to a 15-20 % band largely bucking the world wide slowdown.

The Rigid Packaging industry that comprises of Drums and Containers made from Metal, Plastics, Fiber Board and Composite materials is growing at about 13% PA. Within the industry, there is a migration to plastics and the major metal drum manufacturers have joined the bandwagon themselves by setting up parallel facilities for manufacturing Plastic containers. The 6 million units Plastic Drum market (INR 5 bn.) is growing at over 16% while the 10 million drum steel market still manages a positive growth of 2% and is valued at around INR 2 bn. The fiber drum and composites valued at INR 4 bn. is also growing at around 10%.

The INR 140 bn. flexible bulk packaging industry that includes woven sacks, leno bags, wrapping fabric, and flexible intermediate bulk container (FIBC) is growing at over 20% with FIBC containers expected to grow three fold in the next 5 years riding an increased industrial production and a shift toward higher-value containers offering enhanced performance and supply chain efficiency. In fact, the global slowdown has been an opportunity for the Indian FIBC manufacturers as the production cuts by the companies in Europe and USA has resulted in the sourcing shifting to India adding an important factor to the growth story.

Converting: Opportunities Galore

The Indian economy is growing and so is the Packaging industry. As growth rides on increased industrial production and international trade, demands on package converters have become more intense and sophisticated.

Within India, increasing penetration of organised retail (including foreign players who are large consumers of flexible packaging solutions) and increasing preference for branded products has added fuel to the demand for flexible packaging solutions. Machines and advanced technologies for printing and converting packaging materials for the Flexible Packaging Industry has come up to meet the rising requirement.

The Indian Label Industry is growing at a rate of more than 15% with several press manufacturers and label converters gearing up to challenges. The industry has rapidly evolved and is global in its outlook and delivery.

There are close to 5,000 box plants scattered throughout the subcontinent in classic developing-country industry fashion, mostly fragmented and family-owned.

So how does the country meet this ever increasing demand?

The larger Indian converters have been adopting the latest technologies and several high-end machines have been installed in the country in the past few years. These machines are largely imported from the western countries, with Germany and Italy accounting for almost 45% of the total packaging machinery imports. However, as the need to upgrade is felt by the smaller converters and corrugators and many commercial printers diversify into package printing, there is an increasing focus on machines made in Taiwan, Korea and also China. Meantime, the Indian machinery manufacturers have also geared up and are today making machines that are lapped up by the growing industry in India. Some of these machinery manufacturers are also making inroads in the export markets and are moving beyond the traditional Asian neighbours and the countries in the Gulf to South Africa, East Europe and even South America.

However, the present per capita consumption of packaging in the country is dramatically lower than the global averages. All the pointers indicate that the packaging industry is set to move to a higher level of growth between 20-25% from the present level of around 12-15 percent.

The packaging converting sector is growing at 15-18% and there is a marked shift from the unorganised segment becoming more organised. The industrial growth in India has seen top players in the A and B tier segments reap high benefits. More importantly, this growth has acted as a catalyst for the aspirations of the C and D tier packagers who are making a concerted effort to move from unorganised to organised operations; from manual to automation.

This has led to greater demand for converting machines. The potential of growth is much larger and unrealized.

Flexography: Growing Demands

World over, Flexography has become the pre-dominant medium for package printing. The use of flexo has also been growing in India. Several sophisticated CI flexo presses have been installed in the past six months. The booming label industry is riding a narrow web flexo invasion as folding carton manufacturers also take a look at this technology.

As India slowly adapts to the global trend where flexo occupies the predominant position for package printing, hosts of opportunities are opening up for Indian converters and the suppliers.

The Indian corrugators have been increasingly adopting flexo printing with water-based inks. The coming years should see a larger share of printing going to flexo in the converting and corrugating industries.

Corrugation: Future Trends

The packaging industry in India has been registering a constant growth rate of 15%. The Corrugated packaging industry is however finding itself at the crossroads. Increasing prices of kraft paper, non availability of international standard papers at affordable prices, resistance of corrugated box user industry to offer sustainable prices, increasing competition, non viability of automatic plants are proving to be hurdles in the growth path.

Despite these adverse circumstances, the industry is all set to take on the challenges and look at the future opportunities. As global companies set up their manufacturing bases in India to meet the growing demand for consumer and white goods – the need for high quality boxes is appearing evident. Progressive Corrugators are setting up automatic board/box making plants to increase production and enhance performance of boxes. In house printing on corrugated is becoming imperative.

All this portends well for the industry. Insurgence of corrugated packaging machines from neighboring China and Taiwan will prove to be a threat as well as a great opportunity considering the inherent capabilities and experience of Indian Corrugated Machinery Manufacturers. Strategic alliances with overseas machinery manufacturers are already happening and will soon become a norm.