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Packaging Industry in India
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Saturday, 02 June, 2012, 08 : 00 AM [IST]
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Rajesh Nath
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fiogf49gjkf0d In India, the retail sector has acquired a burgeoning and well organised shape. This has given a boost to the packaging industry.
The Indian packaging industry is growing at the rate of more than 15% pa and expected to touch US$14 billion (€11.2 billion) in the present financial year (2011 -2012). Further, the growth is expected to double in the coming two years.
The growth of the packaging industry in India can be seen mostly in the second-tier cities where packaging plays an important role in the launch of new products. Big giants like Hindustan Unilever Ltd, Nestle India Ltd, ITC Ltd, Procter & Gamble India Ltd, PepsiCo India Ltd, Coca-Cola India Ltd and Dabur India Ltd have also become quiet aggressive in this form of advertisement. Also the growth in the packaging industry in India is attributed to the increase in the number of joint ventures and partnerships with foreign companies. Now in order to compete at international level, the Indian packaging film industry has to be according to the international packaging standards. This can be done by bringing in new and innovative technologies.
Food packaging market - Industry overview
The food packaging industry in India has tremendous growth potential as the country's per capita consumption of packaging still stands merely at 0.3 kg, far below Japan's 15 kg, Australia's 13.5 kg and USA's 13 kg. The industry has been growing at a healthy CAGR of above 15% during the past several years. The domestic consumption of food & beverage (F&B), milk, vegetables, food grains and pharmaceuticals has given strong impetus of the packaging industry, and is expected to maintain the same trend in the future. In addition, the processed food segment is supporting the industry through its heavy demand for tinplate and foil packaging materials.
The total demand of F&B packaging segment stands at around $16.2 billion and accounts for around 85% market shares followed by pharmaceuticals and other market segments. At present, flexible, rigid and metallic food packaging materials account for around 55% of the total food packaging material market, while printed cartons and rigid packaging segments together represent 28% market shares in value terms. Flexible materials such as food packaging laminates, flexible packaging foils, cookies packaging etc. constitute close to 24% of the overall packaging material market, followed by rigid food packaging material segment
Packaging material segmentation
The total market size of food processing equipment sector in India is estimated at US$1571 million (€1256.8 million). The estimate is considering only the organised sector. India exported approximately 6% of food processing equipments out of total domestic production in 2009. India has around 600-700 packaging machinery manufacturers, 95% of which are placed in the small and medium sector located all over India.
The total import of India's food processing and packaging machinery in 2010 was approximately 360 million Euros.
However, the increasing investments by both domestic and foreign companies in the Indian food processing sector, especially in beverages, dairy products, processed food, edible oil, and marine products have expanded the market for packaging machinery. India processes only 2% to 3% of its food produce that explains the scope for packaging.
One good news for the packaging machinery industry came with the standardisation of excise duties. The excise duty has been reduced from 24% to 16%.
In India's packaged food segment, dairy led the market with a share of around 11.2 million tonnes. It was followed by bakery products (3.5 million tonnes), oils and fats (1.5 million tonnes), dried processed food (0.7 million tonnes) and confectionery (0.2 million tonnes). Packaged dairy industry is expected to reach 15.6 million tonnes by 2014, whereas bakery will touch 4.2 million tonnes by 2014. Likewise oils and fats will contribute 2 million tonnes, dried processed food 1.2 million tonnes and confectionery 0.4 million tonnes by 2014.
Packaging equipment sector
The organised retail market is growing and the government is expected to give approval to permit FDI in multibrand retail shortly. The growing middle class population, rising health-consciousness and competition from the West, are all the boosters for packaging and packaging machinery industry in the country.
The packaging industry in India is a heterogeneous mix of both organised and unorganised sectors. The industry comprises a large number of manufacturers of basic materials, converted packages, machinery and ancillary materials, converted packages, machinery and ancillary materials. Domestic demand for packaging has been anticipated to grow by over 100% within the next 5 years. Recognising this trend, the industry is gearing itself to adopt scientific and functional packaging. The market is expected to grow at an average annual growth rate of 10% over the next five years. In India, packaging machinery manufacturers find most of the demand for their products in the food processing sector. Approximately 50% of the packaging machinery and materials produced is absorbed by the food processing sector, personal products constitute 1%, the tea and coffee industry 10% and industrial products account for the remaining portion of the demand.
Another factor, which has provided substantial stimulus to the packaging industry, is the emphasis of the rapid growth of exports. The export policy has been placing emphasis on value-addition. With this, the need for adopting better packaging methods, materials and machinery to ensure quality, has become very urgent for Indian food products in the international market which demands high quality standards. The packaging machinery manufacturers and packaging material producers are integrating their efforts to meet the future needs of the rapidly developing domestic and export markets. Imports of packaging machinery to India are currently estimated at approximately US$172 million (€139 million). The major equipment suppliers to the Indian market include Germany with a 42% share, Italy 20% share, the US 10%, Switzerland 8% and other including Taiwan, the remaining 20%.
Presence of German machinery manufacturers
In 2010, the export to India of German machinery in food processing and packaging sector increased by around 30% to attain a value of Euro 69 million. Among the prominent German companies in the packaging sector - Bosch Packaging Division has a well established setup in Goa. Bosch is presently in the process of expanding this set-up, which would be completed by early 2012. Further, Multivac in joint venture with Laron inaugurated its manufacturing and testing facility in Manesar around end of 2010. The Oyster Group with a well established set-up in Pune since many years has been quite successful in the Indian market. The ACG Group based in Mumbai has in fact been the pioneer in representing German companies in the packaging sector specifically in the pharma machinery industry. Vedic System based in Pune prides itself with representation of several well known German companies in this sector.
In the Beverage technology sector, the reputed German companies with well established presence in India would be - KHS with a modern facility in Ahmedabad, Krones with a sales and service office in Bangalore and Ziemann with a manufacturing facility in Pune would be the important names to reckon with.
Exam
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