Export opportunities, growth in domestic packaging and automotive sectors to drive polymer demand in India

03-Aug-12
The Indian polymer industry made a promising beginning in 1957, but its growth era started after economic liberalization which facilitated the growth of the major polymer end-use sectors. As per GlobalData, the Indian polymer industry grew at an impressive rate from 2000 to 2011 to become the world's third largest consumer of polymers after China and the US. Most of this growth has been driven by the packaging sector which is the largest consumer of polymers worldwide. With a rapidly growing economy and the increasing spending power of the Indian middle class, the packaging sector is expected to grow further and create a higher demand for polymers. The automotive sector also is one of the fastest growing polymer end-use sectors and is expected to maintain its growth rate in the future. Plasticulture will be the emerging sector which will drive polymer demand over the next five years. Government support has been crucial for polymer industry growth. The government's decision to allow 100% foreign direct investment in the processed food industry will drive the demand from the packaging sector. The national mission on micro irrigation will also help popularize plasticulture in the long term. Replicating the growth in gross domestic product, polymer demand in India grew from 3.459 Million Metric ton per annum (MMtpa) in 2000 to 9.013 MMtpa in 2011 at a Compound Annual Growth Rate (CAGR) of 9.1%. Strong growth in the packaging and automotive sectors will drive the demand further to 14.315 MMtpa in 2016. To meet this growing demand, India increased its polymer production from 3.568 MMtpa in 2000 to 7.377 MMtpa in 2016. Production is expected to increase to 11.575 MMtpa in 2016. India's processed plastics exports have also grown in the last five years to reach to $2.323 billion in the fiscal year ended 2011. As the investment in the processed plastics industry gradually increases, the scale of operation will also increase. This will result in a larger and more efficient processed plastics industry to complement the upstream polymers industry.
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