Packaging Industry in India

The current wave of economic development in India is being seen from all over the world. As
infrastructure, manufacturing, agriculture, and services grow at high rates the packaging industry is
also showing great variety and depth in its growth. India’s packaging industry may achieve an annual
turnover as high as US$ 5 billion in the current financial year with a growth rate nearly 25 per cent in
significant segments. Leading companies in the Indian packaging industry show a compound annual
growth rate of 30 per cent, and the Indian Rupee is strengthening against the US dollar at annual rate
of 4 to 5 per cent. Even then, the US$ 5 billion figure would represent about one per cent of the
current global packaging industry.
In 2001, the packaging industry worldwide generated an annual estimated turnover of US$ 417 billion.
The major regions that made up this total include Europe, US$ 129 billion; North America, $116
billion; and Japan, US$ 81 billion. India’s consumer packaging accounted for just US$ 2.3 billion in
that year, that is about half of one per cent of the global packaging volume.

Packaging in India in 2001

Today, packaging is produced more quickly and efficiently. It is generally lighter in weight, uses less
material, is easier to open, dispense from, reseal, store, and dispose. Packaging has evolved from a
relatively small range of heavy, rigid containers made of wood, glass, and steel, to a broad array of
rigid, semi rigid and flexible packaging options increasingly made from specialized lightweight
materials.

Flexible Packaging
Flexible packaging consists of multi-layer laminated sheets of plastics (PVC, LDPE, HDPE, BOPP,
BOPET), paper, cloth, or metal foils that are used separately or in combination for various packaging
applications. However, this article discusses flexible packaging as laminates of plastics that have a
unique set of properties that ensure toughness, moisture resistance, aroma retention, gloss, grease
resistance, heat sealability, printability, low odour and taste. These find use in packaging food, tea,
coffee, spices, chewing tobacco, bakery, confectionary, oils, and in certain other non-food applications
such as household detergents, health and personal care, soaps, and shampoos.

Causes of Flexible Packaging

• Protection:Flexible Packaging gives total consumer protection by keeping the product clean
and protecting it from pilferage and adulteration
• Barrier:It provides good barrier properties against moisture and gases and protects food from
damage and wastage
• Convenience:It provides convenience of handling and disposal after use
• Cost Saving in Material:Flexible Packaging is light — a one kilogram oil pack weighs less
than 10 grams compared to at least a 40 gram HDPE jar or 32-35 gram of PET, thereby giving
tremendous saving in raw material cost.
• Cost Saving in Storage and Transport:It fits closely to the shape of the contents and saves
cost of storage and transport.
• Savings in Raw Material Consumption:Tremendous saving in raw material consumption,
serving the national cause by extension of usage at least times four times.
• More Per Pack:It provides much more product per a given amount of package. Good
examples include coffee, nuts and snacks that come in foil brick packs and pouches rather
than in cans or jars; juice sold in pouches rather than in rigid containers, and household
cleaner refills that come in thin pouches rather than in glass bottles.
• Smaller Units Possible:Thus the option to buy only the required quantity at a time.
• Conservation of Energy:Considerable conservation of energy for conversion. For a steel
coffee can to be efficient as a foil brick pack, the can would have to be recycled at a rate of 85
per cent. However, steel cans are currently being recycled at a rate of about 45 per cent.
• Important in Lifestyles:Convenience foods, individually packed small servings,
microwaveable meals, “easy opening” packaging, secure packaging for pharmaceuticals and
hazardous substances, are all examples of packaging playing a role in assisting and promoting
our lifestyles.
 • Builds Brands:Helps product manufactures enhance brand images, increase sales and realize
new market opportunities

Flexible Packaging Demand in India and Worldwide

World demand for converted flexible packaging will grow at more than 4 per cent per year through
2005 to nearly 14 million metric tons, with a value exceeding US$ 50 billion. The best gains are
expected in the world’s emerging markets, including Eastern Asia, Eastern Europe, Africa, and Middle
East. India holds largely untapped markets with a potential of double digit market growth. The flexible
packaging industry in India is currently estimated to be US$ 1 billion and records a high growth rate of
approximately 20 per cent.

The expansion of the Indian flex-pack market has accelerated due to :

• A growing middle class of over 300 million.

• The conversion of the more traditional rigid packaging into flexible forms.
• A favourable government tax structure. Excise duty that was once 24% has been reduced to
16%.
• Liberalization of the Indian economy since 1991.
• Globalization and the influx of multinational companies.
• Modern plants and equipment available to the flexible packaging industry.

Considering these factors it is only obvious that flexible packaging has a very bright future in India
and is here to stay and grow in a big way.
The major Indian players in flexible packaging

The Indian packaging industry is a combination of organized large Indian and International companies
and the unorganised small and medium local companies. The organized sector of the industry may be
less than 5 per cent of the companies in the overall industry but it nevertheless controls over 70 per
cent of the market by volume. The organized sector operates in the laminated product segment such
as form-fill-seal pouches, Tetrapacks, and lamitubes.

Converted Flexible Packaging Demand

Item 1990 1995 2000 2005 2010
Converted
Flexible
63 153 295 595 1125
Packaging
Demand
By Material
19 54 100 190 340
Polyethylene
Polypropylene 5 20 60 160 360
Other Plastics 19 35 60 105 175
By Market
16 39 74 146 270
Nonfood
Paper and Foil 20 44 75 140 250
Food 47 114 221 449 855

There are around 13,000 converters in India — a majority in the small and medium sector located in
all parts of the country. It is estimated that there are more than 200 flex-pack (flexible packaging)
converters in India – 50 units in the organized sector constituting 40 per cent of the Indian flexible
packaging industry and about 150 in the unorganized sector that make up the remaining 60%. Most
small operations have processing capacities of less than 250 tons a month and produce overwraps,
coextrusion films, and polysacs.At least ten flex-pack converters process more than 4,000 T/annum
and are on par with leading international operations. These larger Indian flexible packaging companies
include

• Flex Industries Limited

• Paper Products Limited (Huhtamaki Group)
• Positive Packaging
• Multiflex
• Paharpur Industries Limited

Demand in India
The current demand for flexible packaging in India, stands at about 500,000 tons.

Consumption of Flexible Packaging — India in Comparison to the Rest of the World

According to industry experts, annual flexible packaging consumption per capita in various parts of the
world is roughly as follows:

• N. America : US$45
• Japan : US$31
• W.Europe : US$25
• S.Korea : US$15
• Thailand : US$3
• China : US$2
• India : US$1

It is also observed that a mere 20 per cent of the population in India consumes 80 per cent of the
packaged production whereas the remaining 80 per cent of the population have an access to only 20
per cent of the packaged production. There exists an exceptional gap in India between the necessary
and actual demand for packaging of essential commodities and this is one of the major reasons why
the growth of flexible packaging is not an alternative here but is rather an imperative.

Major Segments
The consumer market dominates the global packaging industry and accounts for an estimated 70 per
cent of sales, with industrial applications taking the remaining 30 per cent of the share. The food
industry is the single largest end-user market, valued at around US$ 145 billion, followed by the
beverage industry at approximately US $75 billion.

A high degree of potential exists for almost all user segments in India which are expanding
appreciably:

• Processed Foods
• Mouth Fresheners (pan masala)
• Beverages
• Confectionary
• Bakery Products
• Spices
• Edible Oils
• Soaps and Detergents
• Drugs and Pharmaceuticals
• Cosmetics and Personal Care
• Chemicals and Fertilizers
• Office Stationary
 • Engineering Products
• Tattoos

According to Freedonia, food and agricultural markets dominate the sales of converted flexible
packaging in India and will continue to expand on account of several factors — rising consumption of
packaged foodstuff; the increasing presence of multinational food and beverage firms in India; the
trend towards additional processing of food grains and fresh produce; ongoing efforts to improve
sanitation and food safety.

Key markets include rice, other grains, food crops, various processed foods, and chewing tobacco.
Personal care products such as cosmetics and toiletries are also important with fast growing Indian
markets. Growth is seen in the pharmaceutical sector also due to expanding penetration of a large
drug-producing industry.

The Indian processed food industry stands at about US$ 30 billion and accounts for about 13 per cent
of the country’s exports and involves 6 per cent of the total industrial investment in the country. Of
this packaged food stands close to only about US$ 0.85 billion. Thus there is a tremendous potential
for growth of flexible packaging in the food and processed food sectors.

In 1999-2000, the total production of rice in India was 90 million tons. If even 5 per cent of the rice
produced were to be packaged it would alone generate a demand for 75000 tons of flexible packaging
material.

The total wheat production in India was 75 million tons. Even if 7 per cent of it were to be packaged it
would create a demand for 90000 tons of flexible packaging material. The total sugar produced in
India was 24.84 million tons. If 5 per cent of this was to be packaged it would alone generate a
demand for 50000 tons of laminates. The total salt produced in India was 5 million tons. Packing 25
per cent of this quantity would generate a demand of 150,000 tons of flexible packaging. This clearly
shows the tremendous potential for the growth of flexible packaging in India.
Flexible packaging materials in India

Going by the available data, an estimated 250,000 tons of flexible packaging materials for retail sales
in the form of laminates and co-extruded films were consumed in India last year to pack a very large
spectrum of products covering processed and convenience foods, fruit juice, beverages, dry and
malted products, spices, tea, coffee, edible oils, toiletries, cosmetics, motor oils, and other products.
Almost all the raw materials required in flexible packaging such as BOPP, PET, PE granules, aluminium
foil, adhesives, and printing inks are made in India. These inputs are of international quality and are
exported worldwide.

Packaging Equipment Manufactured in India

India makes most of the equipment needed by the converting industry, including rotogravure printing
presses, laminators, slitters, and pouching machines. A full range of semi-automatic to fully
automated filling, sealing and wrapping machines is manufactured in India. These machines are of
high quality and are very competitive in price and are exported in a big way to developed countries as
well. There are some 600 to 700 packaging machine manufacturers, 95% of which are in small and
medium sector and located all over the country.

The Indian market for food packaging equipment amounts to about US$ 80 million. Currently, a mere
2 per cent of India’s food production is being processed, and there are plans in place to increase the
food processing level to 10 per cent over a period of ten years thereby increasing the demand for
packaging equipment manifold. Another sector with a large demand for packaging machinery is the
Indian cosmetic packaging segment that is expected to grow at a rate of over 20 per cent in the next
few years.

The flexible packaging industry has a very crucial role to play in the lives of the ordinary people of
India and thus has a great future here. Every broad industry or agricultural sector that consumes
flexible packaging has its own unique and dynamic set of requirements. The huge possibilities latent in
each of these sectors have to be defined and cultivated. India is indeed a dynamic, developing and
demanding market and most of its potential has not yet been identified, leave apart conquered or
covered. As new aspects of this market and its consumers’ behaviours are defined and chalked out
everyday, the need for new solutions unique to the Indian market emerge.

Quality processes such as Six Sigma, waste minimization, the optimisation of supply chain efficiency
through, for example, eCommerce initiatives, can contribute much to improved performance. So can
“added value” products and services and an imaginative approach to meeting customers’ needs. In a
world where commoditization is a fact, it’s evident that companies that develop unique products and
services that are “genuinely out of the box” solutions to end users’ problems will gain a significant
competitive edge. Goethe rightly said, “Knowing is not enough, we must apply. Willing is not enough,
we must do.”