India poised to become a polymers powerhouse, report says

Pant said the growth of the polymer industry in India has been gradual. The major polymer end-use sectors, such as packaging, automotive, and construction, gained momentum after the economic liberalization in 1991.

The real growth period started in the last decade when India's retail industry provided a boost to the packaging sector, which resulted in a demand for plastic packaging materials. The automotive sector received a great degree of autonomy, and production increased by more than four times in the last decade.

In 2009, India surpassed Japan as the third largest per capita consumer of polymers. This level, however, is still much lower than the global average of 28.9 kg.

The per capita plastics consumption in India was 7.4 kg in 2010, while per capita consumption in China was 24.2 kg, Pant said. In North America and Europe, it is more than 100 kg.

"This shows India's position as a potentially large, growing yet untapped market," he said. "The polymer market has a bright future in India, as all the end-use sectors are poised to grow in the long term."

Production levels are soaring in order to keep up with India's demand, according to GlobalData. In 2011, the manufacture of polymer products was 7.377 million metric tons per annum (MMtpa), and this will surge at a Compound Annual Growth Rate (CAGR) of 9.4% to reach 11.575 MMtpa by 2016.

GlobalData's research indicates that polymer demand in India is outstripping the country's strong GDP growth. From 2000 to 2011, India's GDP climbed at a CAGR of 7.6%, whereas polymer consumption across all areas grew at a CAGR of 9.1%.

Pant said India's polymer industry is highly dependent on the packaging sector, which is the biggest demand driver for the country. Demand for polymers in the packaging sector will grow further as the share of the organized retail is set to increase from 4.8% in 2010 to 23.5% in 2020.

Plasticulture, the use of plastic in agriculture, is another important factor that will impact the polymer industry in the future, Pant said. With an increasing Indian population, the demand for food will also grow rapidly.

Since the country has limited agricultural resources such as land and water, plasticulture is considered a solution to improve agriculture productivity, Pant said.

Micro-irrigation, which comes under plasticulture, is viewed as an efficient method to reduce water requirements and improve productivity. The government is planning to bring 10 million hectares of land under micro-irrigation, which is estimated to create 0.495 MMtpa of polymers demand by 2017.

India's government has played a key role in boosting the significance of polymers, in terms of both consumer demand and in the production industry, according to Pant. The government has delineated Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIRs), and four of these PCPIRs have been approved so far and two more are in the pipeline.

The government also approved 100% Foreign Direct Investment (FDI). This allows foreign firms to have 100% ownership of food processing companies, which will in turn create a higher demand for plastic packaging materials, according to the study.

Pant said due to the low level of per capita polymer consumption, fast-growing middle class, growth in the economy, and strong end-use sectors, polymer demand will only grow in India.

"The country will continue to witness irreversible processes of industrialization and urbanization at a fast pace," he said. "This will provide a boost to the packaging, automotive, construction and electronic sectors in the future as well, and consequently, to the polymers demand in the country."

GlobalData's research methodology includes both secondary and primary research for various markets. The company mines hundreds of petrochemicals news sources, national bodies, associations and companies to capture information to feed into the database.

The research group conducts approximately 1000 primary interviews in the petrochemicals industry annually. GlobalData's pool of primary research candidates for petrochemicals eTrack databases include CEOs, VPs, business development managers, market intelligence managers, and national sales managers.