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rd3 National Conference on

SUSTAINABLEINFRASTRUCTURE

WITH PLASTICS

Knowledge and Strategic Partner

Knowledge Paper on

Plastic Industry for InfrastructureFebruary 2017


rd3 National Conference on

SUSTAINABLEINFRASTRUCTURE

WITH PLASTICS

Knowledge Paper on

Plastic Industry for InfrastructureFebruary 2017

Message

The plastics industry continues to break into newer spheres of industry, thereby enabling

Indian industry churn out products that are lighter and cost-effective. This industry has been

one of the of the fastest growing industries in the Indian economy. The sector has huge

unrealized potential, as indicated by the present very low per capita consumption levels of

polymers in India which is ~11 kg vis-à-vis 38 kg in China, 65 kg in Europe and the global

average of ~28 kg

I am pleased to know that FICCI, jointly with OPPI and Department of Chemicals &

Petrochemicals, Government of India is organising a conference on the sector with the theme

“Sustainable infrastructure with Plastics”. Indeed the plastics industry is becoming

increasingly important for facilitating sound infrastructure in a very sustainable manner. The

aim of this conference is to debate the issues and potential of this important emerging sector

and determine the way forward. I am confident that the Conference will achieve its objectives

and I wish it all the success.

Mr. Vinay MathurDeputy Secretary General

Mr. Prabh DasChairman-FICCI National Petrochemicals CommitteeManaging Director & CEOHPCL-Mittal Energy Limited

The plastic Industry is making significant contribution to the economic developments and

growth of various key sectors in the country, be it Infrastructure, Agriculture, Horticulture,

Healthcare, Automotive or construction industry, to name a few. Infrastructure is a key driver

for the Indian economy. Good transport modes, roads, ports and allied infrastructure are pre-

requisites for the sustained growth of the country. The Government of India is taking every

possible initiative to boost the sector. The effort is being well supported by the Indian Plastic

Industry.

The Indian plastics industry has huge unrealized potential of growth given the presently very

low usage levels compared to the global standards. At the same time, this industry in the

coming decades has to promote sustainable development by investing in technologies that

protects environment and stimulates growth while balancing economic needs and financial

constraints. Plastics wastes challenge has to be managed better. Linkage of plastics waste

management with prospects of recycling industry will be a good idea.

I wish all the success to the conference.

Table of Contents1. Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 05

2. Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 07

3. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 09

4. Market overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

5. Key growth drivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

5.1. Agriculture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

5.2. Packaging Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

5.3. Automotive. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

5.4. Electronics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

5.5. Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

6. Modern applications of plastics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

6.1. Flexible packaging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

6.2. Automotive. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

6.3. Textile fibers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

7. Challenges faced by Plastic processing industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

7.1. Highly fragmented plastic processing industry . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

7.2. Environmental hazards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

7.3. Want of newer technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

7.4 Price and Currency Volatility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21


01

8. Key Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

8.1. Plasticulture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

8.2. Growth in key end-use industries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

8.3. Growing interest in Bio-Plastics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

8.4. Effective Waste Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

9. Opportunities in Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

9.1. PVC – Pipes & Fittings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

9.2. Rigid Pipe segment / Agriculture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

9.3. Plastic moulded furniture segment: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

10. Government initiatives supporting plastic usage in infrastructure . . . . . . . . . . . . . . . . . . . . 27

10.1. Government’s programme of ‘Housing for all by 2022’ . . . . . . . . . . . . . . . . . . . . . . . 27

10.2. Swachh Bharat Mission - Boost for plastic products . . . . . . . . . . . . . . . . . . . . . . . . 27

10.3. AMRUT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

11. Way Forward. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

12. References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

13. Sustainable Infrastructure with Plastics (Article). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

14 About Tata Strategic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

15 Tata Strategic Contacts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35


02

Figure 1: Applications of Plastic processing industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 09

Figure 2: Structure of the Indian Plastic Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Figure 3: Plastic Processing in India (MMTPA). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Figure 4: Per capita plastic products consumption (Kg/person) . . . . . . . . . . . . . . . . . . . . . . . . . 13

Figure 5: Processes in Plastic Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Figure 6: Plastic products demand growth drivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Figure 7: Emerging trends in packaging industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Figure 8: Application break-up of PVC - India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Figure 9: Application break-up of PVC - Global . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25


Table of Figures

03

1. Preface

This report attempts to provide the reader an overview of the Indian plastic processing industry, its

growth prospects, challenges faced, emerging applications of plastics in the market and the growth of

plastic usage in infrastructure.

The Indian Plastic Industry gained momentum in the early 1990's. Further impetus was added with

investments in raw material production from mid 1990's onwards, which fuelled investments in plastic

processing industry as well as downstream machinery sector.

In the last decade, a number of emerging applications of plastics have been developed in many

industries, such as Automotive, Packaging, Agriculture and Infrastructure, which have changed the day

to day lives of the people. The industry has produced better and improved quality of plastics with the

help of new technologies, especially in the packaging industry leading to replacement of several

materials such as wood, metals and glass.

With the government's support, a tremendous growth in the plastic processing sector is envisaged.

Infrastructure is one of the key drivers for the Indian economy. The Government of India is taking every

possible initiative to boost the infrastructure sector with investments of INR 25 lakh crore over the next

3 years in roads, railways and shipping infrastructure. Plastics play an important role in these sectors

through usage in various products like pipes, wires & cables, water proofing membranes and wood PVC

composites. Consequently, higher investments in these sectors will drive the demand for plastics.

We sincerely thank industry leaders, experts and all other participants whose valuable inputs have

helped in developing this report. As always, it was an insightful experience for the team to materialize

this report.

Charu KapoorPrincipal – Chemicals

Tata Strategic Management [email protected]

P S SinghHead - Chemicals & Petrochemicals

[email protected]

Manish PanchalSr. Practice Head – Chemical & SCMTata Strategic Management Group

[email protected]


05

2. Executive Summary

The Indian plastic industry is making significant contribution to the economic development and growth

of various key sectors in the country which includes Automotive, Construction, Electronics, Healthcare,

Textiles, and FMCG. The developments in the plastic machinery sector are coupled with developments in

the petrochemical sector, both of which support the plastic processing sector. This has facilitated plastic

processors to build capacities for the service of both the domestic market and the markets overseas.

Today, the plastic processing sector comprises over 30,000 units involved in producing a variety of

items, gaining notable importance in different spheres of activity with per capita consumption

increasing. The plastic processing industry has the potential to contribute in bringing foreign

investments and thus India’s vision of becoming a manufacturing hub.

Our study indicates that plastics processing industry has grown at a CAGR of 10% in volume terms from

8.3 MMTPA in FY10 to 13.4 MMTPA in FY15 and is expected to grow at a CAGR of 10.5% from FY15 to FY20

to reach 22 MMTPA.

In value terms, the plastic processing industry has grown at a CAGR of 11% from INR 35,000 Cr. in FY ’05

to INR 100,000 Cr. in FY15.

Current low levels of per capita consumption (11 Kg), increased growth in end use industries, higher

penetration of plastics in various existing applications and ever growing range of new applications

could further propel the growth of plastics in India.

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Moreover, in the last decade, several new applications of plastic products have emerged in several

sectors boosting the industry further. For example, long fiber reinforced thermoplastic for automotive

industry, fibers that can trap infra-red radiations, packaging that can increase the shelf life of products

etc. have created demand for plastics which were in their nascent stage in India.

However, despite having a good growth potential, the plastic processing industry faces many challenges

in terms of environmental myths, lack of advanced technology, limited infrastructure, & high volatility

in feedstock prices. To overcome these challenges, significant efforts will have to be made by all the

stakeholders to realize the real potential of this industry.

The Government of India is taking every possible initiative to boost the infrastructure sector with

investments of INR 25 lakh crore over the next 3 years in roads, railways and shipping infrastructure.

Investments in water and sanitation management, irrigation, building & construction, power, transport

and retail have been encouraged. Plastics play an important role in these sectors through various

products like pipes, wires & cables, water proofing membranes, wood PVC composites and other sectors.

Consequently, higher investments in these sectors will drive the demand for plastics.

08


3. | IntroductionSince independence, the plastic industry in India has been playing a predominant role in shaping our

lives. The plastic industry in India has made significant achievements since its beginning by

commencing production of polystyrene in 1957. In

the last decade, with the advent of new and

improved products, the industry has gained

greater importance with the production of better

and improved quality of plastic products.

The plastic industry caters to the entire spectrum

of daily use items and covers almost every sphere

of life such as clothing, housing, construction,

furniture, automobiles, household items,

agriculture, horticulture, irrigation, packaging,

medical appliances, electronics and electrical

items.

The figure below represents the key applications of

products of plastic processing.

Packaging

Agriculture

Textile Fibers

Infrastructure

AutomotiveElectronicsPlastic

Applications

Figure 1: Applications of Plastic

processing industry

09


As described in Figure 2, the entire chain in the Plastic industry can be classified into:

(A) Upstream sector: Manufacturing of polymers and

(B) Downstream sector: Conversion of polymers into plastic articles

The upstream polymer manufacturers have commissioned globally competitive size plants with imported

state-of-art technology from the world leaders. The upstream petrochemical industries have also

witnessed consolidation to remain globally competitive.

The downstream plastic processing industry is highly fragmented and consists of micro, small and

medium units. There are over 30,000 registered plastic processing units of which about 75% are in the

small-scale sector. The small-scale sector, however, accounts for only about 25% of polymer

consumption. The industry also consumes recycled plastic, which constitutes about 30% of total

consumption.

Figure 2: Structure of the Indian Plastic Industry

End-

Use

r In

dust

ries

Polymer

Manufacturers

Equipment

Manufacturers

Plastics Processors

Recycling Players

Fragmented with~30,000 units mostly operated by small players

Dominated by ~15

large industrial groups

Dominated by

~200 players~4,000 unorganized units~3,500 organized units

High

Low

Flow of equipment

Flow of virgin polymers

Flow of processed plastics

Flow of recycled plastics

Con

cen

trat

ion

Source: CRISIL, Plastindia Foundation, Kanvic, TSMG Analysis

10


There is a good scope for innovative products which will further contribute to growth of the sector in

years to come. The packaging industry has witnessed a complete replacement of old age products with

the new ones.

With India's population similar to China's, but polymer demand at only one-fifth of China's, the Indian

subcontinent's plastics industry has a good potential for growth. Improving standards of living have led

to an increase in consumption of a wide range of consumer goods from packaged foods to automobiles.

Investments in infrastructure and agriculture are also further fueling the demand of plastics and related

products in India.

While the outlook for plastics processing in the Indian subcontinent is positive, the industry still faces

many challenges in terms of inadequate infrastructure & environmental myths.

11


4. | Market overview

The plastics processing industry has grown at a CAGR of 10% in volume terms from 8.3 MMTPA in FY10 to

13.4 MMTPA in FY15 and is expected to grow at a CAGR of approximately 10.5% from FY15 to FY20 to

reach 22 MMTPA (Refer Figure 3).

In value terms, the plastic processing industry has grown at a CAGR of 11% from INR 35,000 Cr. in FY05

to INR 100,000 Cr. in FY15.

8.3

22

FY10 FY15 FY20

10%

10.5%

Source: Industry reports, TATA Strategic Analysis

12


Figure 3: Plastic Processing in India (MMTPA)

Snapshot of the Indian Plastics Processing Industry

Estimated size of plastic processing in value (FY15) ~INR 1 lakh crore

Market size in volume (FY15) 13.4 MMTPA

Processing Units > 30,000

Technical manpower ( as per CIPET) 11 lakh employees

Growth Rate 10-11%

Per Capita Plastic Consumption 11 kg (World: 28kg)

Plastics are gradually becoming the material of choice for extensive usage due to their unique and

diverse set of properties. With the government policies and initiatives stressing on manufacturing in the

country, competitive rivalry in the sector is bound to grow considerably.

However, due to low penetration levels of plastic products in the Indian market, especially rural

segment, the per capita consumption of plastics is low. As shown in Figure 4, with current per capita

consumption of plastics in the U.S. at 109 kg and in China at 38 kg, India at 11 kg has a long way to go.

The low consumption level indicates an enormous growth potential for the plastics sector.

Figure 4: Per capita plastic products consumption (Kg/person)

109

65

3832

11

28

USA Europe China Brazil India World

Source: AIPMA and Plastindia, TATA Strategic Analysis

Due to increasing domestic consumption and high potential, India is emerging as one of the focus

destinations for plastics and downstream players worldwide.

13


To manufacture finished products, polymers are processed through various types of techniques namely

extrusion, injection moulding, blow moulding and roto moulding. Extrusion process is the most

commonly used process in India and accounts for ~64% of total consumption by downstream plastic

processing industries. Various products manufactured through these processes are highlighted in

Figure 5.

Figure 5: Processes in Plastic Industry

14

1

Classification of plastic products by type

of process

Extrusion

• Films & Sheets, Fibres & Filments Pipe, Conduits & profiles, other applications

Roto moulding

• Large circular thanks such as water tanks

4

Injection moulding

• Industrial Household Injection mouiding Thermo-ware/Moulded luggage

2

3

Blow moulding

• Bottles, containers, Toys and Housewares


5. | Key growth drivers

A favorable cost benefit ratio and a versatile range of applications encourages the growth of plastics.

The properties of these materials can be customized to meet specific demands by varying the chemical

properties like molecular weight & side chain branching or by making copolymers and polymer blends.

Major reasons for the growth of the plastic processing industry are growth in the end use segments and

higher penetration of plastics in various industry segments. The following figure illustrates major

growth drivers for various industries-

Figure 6: Plastic products demand growth drivers

Agriculture • Advanced Agricultural technology• Distribution channels• Refrigerated storage

Other growth areas•• Automotive/Appliances• Medical/personal care

Industrial/rigid packagingPlastic

demand growth drivers

Packaging Industry•• FMCG items• Packaged & fast food industry

Food/Processed food

Infrastructure•• Public utilities services• Mega highway projects

Building & Construction

15


5.1. Agriculture

5.2. Packaging Industry

India supports nearly 18% of world's population with 2.4% land resource and 4% water resource, and

lately the dwindling quality and the vagaries of the availability of these resources are raising serious

questions on the sustainability of the agricultural practice. To counter the problem, efforts need to be

redirected to improve the productivity of the land, efficiency of the supply chain while reducing the

carbon footprint as a result of agricultural practice. Plasticulture, which is use of plastic in agricultural

practice, is an answer to this rallying cry. Plasticulture is a scientific way of carrying out agriculture,

which not only improves the productivity, but optimizes the input resources as well, thereby reducing

the cost.

There has been significant progress in the adoption of Plasticulture techniques in the last decade,

however the low penetration levels suggest it needs to grow at a rapid pace from now. On the demand

side, awareness of the available options and subsidies, its relevance and applicability could improve the

adoption rate. From the supply side, industry needs to take efforts to bring down the capital cost, work

on creating an environment where Plasticulture culture is a norm than exception. Concentrated efforts

in direction of demonstration, spreading Word of mouth, and building credibility by performance &

after-sales services could help shape the industry.

The packaging industry in India is one of the fastest growing industries with influence on all industries,

directly or indirectly. Indian packaging industry has registered a CAGR of 15% in the last five years. The

spending on packaged foods is increasing due to increase in per capita income, urbanization and

growing numbers of working women. There is great growth potential since India's per capita

consumption of packaging is only 4.3 kg whereas neighbouring Asian countries such as China and

Taiwan is about 6 kg and 19 kg respectively. This clearly indicates that the market is under penetrated

and offers a great business opportunity for the Indian plastics packaging industry.

The following factors have played a vital role in the growth of the packaging industry in India over the

years.

A. Retail Growth: Increased presence of global multinational companies has boosted the demand

in the processed food, beverages, cosmetics, consumer products, toiletries and pharmaceutical

space. The manufacturing units, especially the fast moving consumer goods (FMCG)

manufacturers are exploring new markets continuously through newer retail models. This has

widened the market and also increased the demand of packaging of the products.

B. Growth of Smaller Packaging: The current middle class population in India is approximately 30

Cr. which indicate that from affordability point of view, the demand for smaller packaging is

huge. This population is rapidly growing and hence this will drive the growth for packaging

industry. Smaller packaging caters to even the rural population and lower income groups.

C. Changing Lifestyle: Since the concept of globalization has penetrated the Indian market,

significant cultural changes have been witnessed. People today are buying more of branded

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products and thus packaging is playing an important role in creating and sustaining the brand

equity. With a higher per capita income, the demand of personal hygiene products and

convenience products has increased leading to increased demand for plastics.

The Indian auto industry is one the largest in the world and has grown at about 10-11% in the last five

years from 14 million units in FY10 to 23 million units in FY15. The automobile industry accounts for

7.1% of the country's gross domestic product (GDP). An expanding middle class, a young population,

and an increasing interest of companies in exploring rural markets have made the two wheelers segment

(with 81% market share) the leader of the Indian automobile market. With growing population,

increasing per capita income and aspirations to own a vehicle, various auto segments have experienced

aggressive growth in the past five years. Given the positive outlook for the automobile industry, there is

high potential for plastic usage to rise in the auto segment.

The Indian electronics market is one of the largest in the world. The main drivers for demand for the

usage of Indian electronic products abroad are technological improvements and cost competitiveness.

The demand for electronics has grown at an estimated 16% in the past five years. In FY15, the demand

stood at USD 136 billion, up from USD 65 billion in FY10. On the other hand, supply is lagging behind at

USD 44 billion in FY15. It has grown at 16% during the same period up from USD 41 billion in FY10. The

growing customer base and the increasing penetration of electronic products in consumer durables

segment have provided enough scope for the growth of plastics in the Indian electronics sector.

Infrastructure is a key driver for the Indian economy. This segment is highly responsible for pushing

India's overall development and enjoys focus from government for policies, ensuring timely creation of

world class infrastructure. India's focus on infrastructure over the last decade made the country the

second fastest growing economy in the world. As per the 12th Five Year Plan, India had committed USD 1

trillion in upgrading its ageing infrastructure like Power, Telecom, Roads, Irrigation, Railways, Oil& Gas

and others. The Reserve Bank of India (RBI) has notified 100% foreign direct investment (FDI) under

automatic route in the construction development sector. The new limit came into effect in December

2014. The Government of India has relaxed rules for FDI in the construction sector by reducing minimum

built-up area as well as capital requirement. It has also liberalised the exit norms. In fact, the Cabinet

has also approved the proposal to amend the FDI policy.

Large investments in sectors such as water and sanitation management, irrigation, building &

construction, power, transport, retail etc. continue to been made. PVC and CPVC plays important role in

the sustainable management of these sectors through various products like pipes, wires & cables, water

proofing membranes, wood PVC composites, food and medicinal packaging.

These huge investments in infrastructure will result in making India a hub for PVC and CPVC product

manufacturing leading to growth in plastics processing sector.

5.3. Automotive

5.4. Electronics

5.5. Infrastructure

17


6. | Modern applications of plastics

The Indian plastic processing sector caters to the requirements of a wide array of applications like

packaging, automobile, consumer durables, healthcare, among others. Following are some of the key

emerging applications that have been noticed.

Plastics replaced many traditionally used packaging materials thereby transforming packaging industry.

Flexible packaging is a sub segment of packaging industry and it is producing revolutionary products.

These products, as shown in Figure 7, focus on enhancing the shelf life of products by keeping intact the

nutritional value of the enclosed product. For example, modified atmospheric packaging (MAP) has also

reduced the cost of old style packaging considerably.

6.1. Flexible packaging

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Figure 7: Emerging trends in packaging industry

Secondary Packs

Active packaging (MAP)

Vacuum Packaging

• Saves storage space

• Ease of handling

Jute substitution

• Toughest packaging bags widely used to pack materials for grain, milling and sugar industry

• Enhanced storage life

Packaged Crates

• Saves storage space

• Ease of handling

• Disposable

Glass substitution

• Laminated jars have replaced glass containers

• Cost effective solution-lesser packaging & transportation costs

• PE laminated pouch provides barrier properties during products shelf life

• Maintains freshness by simultaneous respiration & permeation

• Equilibrium packaging atmosphere is created with appropriate % oxygen and carbon dioxide

• Multilayered 5-7 layer films are used

• Lack of oxygen eliminates use of pesticides/fumigation

• Shelf life of almost 3-4 years

6.2. Automotive

6.3. Textile fibers

Long fiber reinforced thermoplastic (LFRT) is a new product which is used in making automotive

products. It has benefits such as 1) Greater design freedom, 2) Potential for parts consolidation, 3)

Weight reduction, 4) Extreme toughness/Durability, 5) Dimensional stability, 6) Corrosion & chemical

resistance, 7) Elimination of secondary operations like painting and welding and 8) Lower total system

cost.

A new kind of fibers have been introduced which trap Infra-red rays and keeps the body warm. It can be

used to make woolen clothes for extremely cold weather.

Another category of fibers is used to make health care fabrics which can regulate the temperature & O2

levels in the body or provide protection against bacteria or are flame retardant.

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7. | Challenges faced by Plastic processing industry

Key challenges faced by the plastic processing industry in India are:

The Indian plastics processing industry is highly fragmented and small and micro players constitute

majority of the units. Indian Petrochemical Industry is facing intense competition from the Middle East

countries where price of feedstock ranges between one-fifth to one-tenth the prices prevailing in

international markets.

India's plastics market depends on labor intensive equipment which has adversely impacted the

productivity. Unreliable power and high energy costs in India as compared with other countries are also

constraints which hamper capacity utilization.

While the usage and benefits of plastics are manifold, it invariably gets branded as a polluting material.

Plastics, being a polymer derived from crude, are made up of long chains of carbon. It takes years for

them to decompose completely. Improper disposal of plastics leads to ground water pollution,

disturbance in soil microbial activity along with releasing of carcinogenic chemicals in the atmosphere

leading to health issues among people. The other life forms also get affected due to this imbalance in

value chain, with stray cattle feeding on thrown-away plastics. These adverse impacts are alarming the

society and industry to ensure proper disposal of plastics. Both government as well as industry needs to

7.1. Highly fragmented plastic processing industry

7.2. Environmental hazards

20


come forward to cater to this issue and sensitize the general mass to follow the ritual of recycling waste

plastic products. If plastics can be collected and disposed of or recycled as per laid down

guidelines/rules then the issue of plastic waste can be suitably addressed. There is wide scope for

industries based on re-cycling of plastics waste. This will not only address the issue of environmental

degradation but will also generate capital.

The Indian Plastic processing industry has seen a shift from low output/low technology machines to

high output, high technology machines. There has been some major technological advancement of

global standards leading to achievements. Focus to develop a state-of-the-art R&D is dying down with

more focus on increasing the capacity utilization. Domestic machinery is manufactured as per the

current technology to improve productivity and energy efficiency, in order to enable the processors to

compete globally. Key machineries are imported from Europe, the U.S. and Japan which invite a 7.5%

customs duty resulting in huge losses. India's technical needs are acute in areas like high production

and automatic blow moulding machines, multilayer blow moulding, stretch/blow moulding machines,

specific projects involving high capital expenditure like PVC calendaring; multilayer film plants for

barrier f ilms, multilayer cast lines, BOPP and non-woven depend exclusively on imported

technology/machinery.

Cost of plastic processing is largely correlated to crude oil price which is a major determining factor for

polymer raw materials. It is worthy of note that crude oil prices have experienced a heightened degree

of volatility in the recent past, wherein prices have plummeted to around USD 50/bbl in 2016 from USD

100/ bbl in 2014. Further, with a large number of raw materials being imported into India, currency

volatility also poses as a significant challenge to plastic processors.

7.3. Want of newer technologies

7.4 Price and Currency Volatility

21


8. | Key Opportunities

8.1. Plasticulture

Plasticulture can play a key role in energy conservation. It essentially stresses on the use of plastics in

agriculture, horticulture, water management, food grains storage and related areas. A multitude of

plastic materials may be employed in plasticulture applications such as water conservation, irrigation

efficiency, crop protection, including farm output practices like crop storage and transportation.

Growing population and decreasing size of arable lands has necessitated the need to employ clean,

green and sustainable practices to save resources and enhance productivity. Usage of plastics in

agriculture can lead to:

• Yield improvement upto 50-60%

• Water savings upto 60-70%

• Prevention of weeds growth

• Soil conservation

• Protection against adverse climatic conditions

• Fertilizer savings upto 30-40%

• Reduction in post-harvest losses

• Conversion – cold desert/wasteland for productive use

22


8.2. Growth in key end-use industries

8.3. Growing interest in Bio-Plastics

8.4. Effective Waste Management

The industries which plastics cater to heavily are FMCG, Construction and Infrastructure and Agriculture.

Increasing population, growing urbanization and shift in lifestyle has pushed these sectors to gain a

high growth in past decade. This has prompted a double-digit growth for plastics in India. With sectors

like pharmaceuticals, personal and home care, etc. emerging in the rural areas and reinforced efforts in

bringing out innovative plastic products, the industry is expecting further uplift in near future.

Growing interest in green products, healthier lifestyles and growing concern to protect environment is

leading to a shift towards bio-plastics. Bio-plastics are plastics that contain bio-based content, are

biodegradable or both. Many polymers like PLA (Poly Lactic Acid), PHA (Poly Hydroxyalkanoates), Bio

PTT (Poly Trimethyl Terephthalate), Bio PDO (Propanediol) etc. are the part of this upcoming trend.

These plastics are significantly made of renewable materials like bio mass and save up to 40% energy in

production as compared to their petrochemical counterparts. They play a crucial role in further

advancement of the plastic industry and as result businesses are focusing on the adoption of such eco-

friendly products. Large numbers of companies are now looking for the development of alternative

feedstock and make use bio-based raw material for their production.

The market for this product is still in its infancy. High cost of bio-plastics, lack of clear understanding

and infrastructure, limited amount of funding available are acting as constraint to the evolution of this

segment. However, increasing stress on green chemistry is expected to bring down the cost, also

increasing environmental awareness, positive attitude from government, continuous R&D efforts and

shift in consumer preference towards environmental friendly option will lead to the evolution in demand

of this industry.

Plastic has low energy requirements during production, hence considered to be energy efficient. It

consumes ~25% less energy in production compared to other alternatives. It results in lower emission of

CO . Thus when compared to glass or aluminium plastics results in lighter environmental footprint. 2

However, plastic is a sustainable choice only if recycled and disposed of properly. This can be achieved

mainly through segregation of waste at source, promotion of waste management infrastructure and the

increased the use of bio-based plastics.

23


9. | Opportunities in Infrastructure

Infrastructure sector is a key driver for the Indian economy. The sector is highly responsible for

propelling India's overall development and enjoys intense focus from Government for initiating policies

that would ensure time-bound creation of world class infrastructure in the countr y.

The plastic industry plays a significant role in this endeavor.

The Indian pipes business has been growing rapidly in the past decade, largely due to increasing

demand for pipes in the irrigation sector and construction industry. Among the several varieties of

pipes available in the market, the demand for plastic pipes such as PVC, CPVC in particular, is on a rise

largely due to

• Gaining popularity of plastic pipes over traditional/ galvanised iron (GI) pipes

• Huge replacement demand

• Flexibility in terms of transportation, less corrosive and long lasting life (25 years v/s 8-10

years of GI pipes)

• Easy installation and competitive price in nature (20-25% cheaper over GI pipes).

Other types of pipes, like steel pipes and ductile iron pipes also have major demand. Across the country,

infrastructural development, urbanization, government's focus on real estate, irrigation is expected to

drive the demand. Construction and agricultural growth have been identified as major factors

facilitating the growth of the pipes industry in the country.

24


9.1. PVC – Pipes & Fittings

Currently, in India, approximately 73% of the PVC is consumed by the Pipes & Fittings industries with the

other sectors comprising only 27%. Globally, Pipes & Fittings account for only 43% of the PVC

consumption, showing that PVC applications in India other than Pipes & Fittings are still in the early

stages and are primed for growth. This, along with the relatively low per capita PVC consumption in

India, shows that future prospects for the Indian PVC processing industry are bright. Although, CPVC

pipes and fittings contributed just ~10% to the overall production capacity in FY15, it is the fastest

growing segment of the PVC pipes and fittings industry in India.

Figure 8: Application break-up of PVC - India

Pipes &Fittings

73%

Profiles3%

Films &Sheets

5%

Wires & 5%

Cables

Flooring 8%Others 6%

Figure 9: Application break-up of PVC - Global

Pipes &Fittings

43%

Profiles19%

Films & Sheets

17%

Wires & Cables

8%

Floorings3%

Others10%

Source: TATA Strategic Analysis Source: TATA Strategic Analysis

In the past few years, the government of India has initiated many new projects and investments in the

irrigation sector. The government's focus is on rural water management, which will be fulfilled only with

proper infrastructure for the transportation of water to the end-user. This factor will remain as one of

the major drivers for the growth of PVC pipe industry in the country along with the expansion of housing

sector and increasing replacement demand for CPVC.

The Indian agriculture piping industry is highly fragmented due to presence of large chunk of players,

giving tough competition both on product offerings and pricing terms. Also, the main reason for low

yield or margins in this segment is due to the less proportion of fittings in usage, compared to the

plumbing segment. There are few organised players operating with significant presence through wide

distribution network and a strong quality product portfolio.

9.2. Rigid Pipe segment / Agriculture

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• Plastics play a major role in managing water resources. The various applications of plastics in

water management include plastic rain water collection tanks, pipes, profiles; waste water

applications (waste water treatment plants) and plastic pipes for water transportation (PVC,

HDPE, LLDPE, PP, FRP).

• Plastic products in water management are being used as compared to various alternate

competitive materials like metal, cement, due to light and weight durability, rust free,

smoother surface.

• The Ministry of Water Resources is responsible for laying down policy guidelines for water

conservation. PVC pipes and fittings with BIS certification are being used in various

water/sewerage transportation applications in various private/government supplies.

Shifting focus towards premium products: In recent years, the CPVC market has seen some

traction of shifting preference towards branded premium products (in spite of price differentiation

of 30-40%). Strong branding and regular product campaigning through various forums (educating

stakeholders about the products along with small prizes, gifts to encourage them) and wide

distribution network has helped a few players to pocket a large share and create a strong reputation

in the customers' eyes.

9.3. Plastic moulded furniture segment:

India's growing economy of the country has encouraged the spending capacity of the people, which in

turn has boosted the sales of branded furniture items in the market. The growing phase of infrastructure

and real estate markets has also augmented the demand for furniture products in the country. In

addition, the entry of international brands and increasing brand awareness amongst Indian inhabitants

has led to the emergence of furniture retailing in India.

The plastic moulded furniture industry has been growing rapidly in the Indian market and from a stage

of infancy the field has risen to almost 70 million in volume, consuming almost 170 kT of polypropylene

material. The popularity of plastic furniture has grown since it offers features unavailable in

conventional wooden and metal furniture, such as easy maintenance, light weight, durability and

various attractive features (such as shapes, designs). Plastic furniture is essentially based on

composition of polypropylene (PP) which contains polymers to provide rigidity and copolymer to lend

impact. There exist around 30 producers of PP chairs in India though 30% of the top producers generate

almost 75% of the market share.

26


10. | Government initiatives supporting plastic usage in infrastructure

10.1. Government's programme of 'Housing for all by 2022'

10.2. Swachh Bharat Mission - Boost for plastic products

Growing urbanisation has led to issues such as land shortage, housing shortfall, congested transit and

stressed existing basic amenities such as water, power and open spaces in towns and cities. To bridge

the demand supply gap and acknowledge the importance of housing issue in the country, the

government has launched a campaign of 'Housing for All by 2022'. Housing shortage coupled with lack

of proper water management system (sewage/drainage) in slums creates ample opportunities for the

piping industry in India. A major application of PVC pipes is in water management for the housing and

agriculture sectors and this can thereby be a strong driver for growth.

Swachh Bharat Mission (SBM) is another flagship programme of the government aimed to stop open

defecation through construction of individual household latrines (IHHL), cluster toilets and community

toilets (especially via PPP mode). Solid and liquid waste management is also an important component of

the programme. According to Census 2011, over 67% of rural households in India lack access to toilets.

In other words, more than 11 crore rural households do not have access to a toilet. Lack of sanitation

and drinking water facilities creates a huge opportunity for PVC pipe manufacturers.

27


10.3. AMRUT

The government has also launched its programme - Atal Mission for Rejuvenation and Urban

Transformation (AMRUT) to provide basic services to household and build amenities in cities. The

purpose of AMRUT is to: 1) Ensure that every household has access to a tap with assured supply of water

and sewerage connections. 2) Increase the amenity value of cities by developing greenery and well

maintained open spaces (e.g. parks). 3) Reduce pollution by switching to public transport or

constructing facilities for non motorised transport (e.g. walking and cycling). AMRUT, a flagship

programme to improve the infrastructure of the country could be a future growth driver of the plastic

piping industry.

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11. | Way Forward

Plastics industry is assured to grow at a good rate with the major applications being in FMCG and

consumer goods. There are several factors like low per-capita consumption, manufacturing focus, end

use industry growth, availability of feedstock, increasing urbanization, changing lifestyle and

demographic dividend, promoting growth of plastic across India.

The plastic processing industry has changed our lives in many aspects. It has the potential to continue

to change the way we grow our crops, the way we build our roads, and the way we live everyday life. It

has significant impact on our economy, generation of wealth and in job creation. Plastics processing

industry will need to invest in modern equipment to reduce costs and improve performance and improve

installed capacities to achieve economies of scale so that the Indian subcontinent can reach its full

potential.

With Government's current campaign on 'Make in India' which has a special focus on the chemical

industry and aims to turn the country into a global manufacturing hub, a tremendous growth in the

plastic processing sector is expected especially in downstream industries. The government should not

hesitate to provide better infrastructure and favorable policies. With a step already being take in that

direction, plastics are bound to find tremendous use in the infrastructure space.

With adequate support from Government and growth in end use demand, our study indicates that the

market for plastic processing industry in India is expected to grow at a CAGR of 10.5% from FY15 to reach

22 MMTPA by FY20.

29


12. | References

1. CRISIL Research and reports

2. Indian Broadcasting Foundation articles

3. Business Standard articles

4. Indian Mirror's articles on “Indian Plastic Industry at a Glance”

5. Money Control's article on “Current Scenario & Way Forward for Indian plastic industry”

6. Nelive article on ”A competitive analysis of plastic industry”

7. Knowledge papers and Whitepapers on plastics and petrochemicals published by Federation of

Indian Chambers of Commerce & Industry (FICCI) Chemicals & Petrochemicals statistics at a glance :

2016

8. Report on Indian Plastic Industry 2015 - 2016, Plastindia Foundation

9. Plastindia's report on plasti-culture and Indian plastic industry

10. IBEF website

11. Plasticnews article – “Plastic consumption to double in India by 2016”

12. Expansion of refineries may boost plastic processing units

13. AIPMA Plastic News 2015

14. IRR (Indian Retail Reports)

15. Central Institute of plastic Engineering report on growth of plastic industry

16. TATA Strategic Management Group's databases

30


Plastics have permeated every facet of human life viz. agriculture and water consumption, building

construction, communication, small and bulk packaging, education, medicine, transportation, defence,

consumer durable to name a few. One of the reasons for great popularity of plastics is due to tremendous

range of properties exhibited by them because of their ease of processing. Hence, the demand for

plastics has been increasing in modern living.

Plastics In Construction

Plastics are widely used in construction, building and

infrastructure. Construction and utility parts in buildings are often

partly or completely polymeric . This can be as wall panels, roofing

materials, piping systems, seals, coatings and a large number of

other products.

To conserve wood, the Govt. of India in 1988 had issued a directive to promote wood substitutes,

including plastics in all Government and institutional purchases for furniture, Door & Window frame and

Shutters. China, faced with similar situation, issued a directive to the effect that Door & Window frames

in all Government buildings should be of PVC plastic only.

Plastics In Transportation

Owing to their light weight, plastics reduce transportation costs

and, therefore, atmospheric carbon dioxide emissions. Public and

private transportation vehicles can now contain up to 23 per cent

plastics typically as parcel shelves, door liners, steering wheels,

electrics and electronics, and recent aircraft such as the Boeing

Dreamliner is designed from up to 50 per cent plastics.

Plastic Tracks

Trains are vital to economies around the world. Rail Pads made of plastics and track systems withstand

heavy loads and harsh conditions longer. The reliability of a rail system is only as good as the reliability of

its tracks. Plastic sleepers are more durable and efficient when compared to the traditionally used

sleepers made from wood and concrete.

Besides the rail pads and sleepers, many other plastic items like safety rail, ladder, advanced composite

toilet module are used in Railways. Similarly a large number of FRP products are also used in Railway

coaches.

Agriculture & Plasticulture

Plastics find applications in Agriculture / Horticulture as stated below:-

• Drip Irrigation

• Plastics Lining of Water Storage Pond

13. | Sustainable Infrastructure with Plastics

31


• Prevention of Soil Erosion

• Plastic Film for Mulching

• Water Lifting

• Water Conveyance and Distribution

• Plastics As An Aid To Improve Cultural Practices of Crops

• Plantation/ Nursery Bags

• Seed Bed Cover

• Soil Sterilization

• Improvement in Ground Nut Crop Through Mulching

Agriculture and infrastructure to drive demand for plastic pipes in India

The PVC plastic pipes market is likely to experience the highest growth, supported by growing demand

from sectors such as water supply, agriculture.

Potable water supply, wastewater treatment, agriculture and chemical sectors are expected to propel the

demand for plastic pipes in India by manifold.

The Indian plastic pipe market is forecast to grow at a CAGR of 10.4 percent till 2021. The major growth

drivers for this market are the growth of government infrastructural spending, increasing residential and

commercial construction, industrial production, irrigation sector, and replacement of aging pipelines.

Polyvinyl chloride (PVC), polyethylene (PE) and polypropylene (PP) are the major raw materials used to

manufacture pipe.

Within the Indian plastic pipe market, agriculture sector is expected to remain the largest application.

The growth of residential and commercial construction and the growth in infrastructure development

especially in the agriculture sector in the country are expected to spur growth for this segment over the

coming years.

According to the report, emerging trends, which have a direct impact on the dynamics of the market, are

the usage of anti-microbial plastic pipes to improve hygiene, consumption of CPVC (chlorinated polyvinyl

chloride) piping system in various applications of plastic pipes, and increasing consumption of

multilayer plastic pipe in gas distribution in the Indian plastic pipe market.

Can Plastic Pave The Way to Greener Global Infrastructure?

The Dutch city of Rotterdam announced that it was considering a proposal to replace a stretch of its roads

with what may become the world's first all-plastic avenue. Proposed by KWS Infra, a subdivision of the

Dutch firm VolkerWessels, the project, simply dubbed “PlasticRoad,” will use entirely recycled materials

reclaimed from ocean dumps and incineration plants. The raw materials will then be used to create Lego-

like building blocks, which the company claims may prove cheaper, easier to work with, and more durable

than the asphalt used in existing boulevards.

32


Small, interlocking, and fully recycled plastic blocks have been on

the mass construction market since the early 2000s, allowing

almost anyone to incorporate such materials into their projects.

Multiple companies had developed several variations on plastic

bricks--some of which poured like concrete and others that stacked

like it--often for use in low-cost and emergency housing. In China,

Malaysia, and Taiwan, experimentation with these bricks proved

that they cost up to 30 percent less than traditional construction

materials, providing greater insulation, resiliency in the face of

disasters, and reusability if a building was torn down.

Recently Welsh company Affresol launched a line of affordable homes and modular buildings that utilized

recycled plastic as raw material.

Yet while people have long made things like manhole covers out of recycled plastics, it appears that no

one had made a wholly plastic road. Many companies, especially out of India, had started adding

shredded plastic to asphalt to help local roads withstand the wear and tear of erosion in the early 2000s.

But even partially plastic asphalt only recently became cost-effective, possibly helping to limit

experimentation in plastic road technologies versus other construction uses.

Recycled plastic materials have proven up to three times more durable than asphalt. They should be able

to withstand temperatures from -40 to 176 degrees Fahrenheit without cracking, preventing erosion.

Instead--as the roads will be hollow--they will provide space for safe water retention. All told, this

should allow a plastic road to last three times as long as a normal road (surviving 50 years at least rather

than at the outside). Since the roads will be constructed out of pre-existing plastics, their construction

will put far less carbon into the air than asphalt and require less polluting maintenance in the long run.

As they can be recycled again into a new road when they break down, the environmental cost of replacing

them will be minimal.

Thus, Plastics enable Sustainable Infrastructure.

33


The article is authored by:

Mr. Deepak Lawale

Secretary General

Organization of Plastics Processors of India

Founded in 1991 as a division of Tata Industries Ltd,

Tata Strategic Management Group is the largest

Indian own management consulting firm. It has a 50

member strong consulting team supported by a

panel of domain experts. Tata Strategic has

undertaken 500+ engagements, with over 100

clients, across countries and sectors.

It has a growing client base outside India with

increasing presence outside the Tata Group. A

majority of revenues now come from outside the

group and more than 20% revenues from clients

outside India.

Tata Strategic offers a comprehensive range of

solutions covering Direction Setting, Driving

Strategic Initiatives and Implementation Support

14. | About Tata Strategic

Our Offerings: We offer End to End Solutions …with tangible Results / Benefits

Strategy Revenue Enhancement

• Competitive Strategy: Entry/Growth

• M & A Support• New Biz Models• Profit Enhancement

• Adjacent Products• Underserved Segments• Sales Effectiveness• Customer Journey• Route to Market

• Supply Chain Optimization

• Workforce Productivity• ThoughputService Levels

• Strategy-Culture Alignment

• Change Management• Family Governance• Talent Management

• Revenue• Term sheet• Market Share

• Profit• Voluem• Key Milestones

• Cycle Time• Service level• Costs

Drive Implementation & Change to derive Benefits

Operational Efficiencey Organization

34


Manish PanchalSr. Practice Head – Chemicals & SCME-mail: [email protected]: +91 22 6637 6713

15. | Tata Strategic Contacts

Charu KapoorPrincipal – ChemicalsE-mail: [email protected]: +91 22 6637 6756

Report co-authored by Nihaal Jelkie ([email protected]), TATA Strategic Management Group.

35


NOTES

NOTES

NOTES

Established in 1927, FICCI is the largest and oldest apex business organisation in India. Its history is closely interwoven with India's struggle for independence, its industrialization, and its emergence as one of the most rapidly growing global economies.

A non-government, not-for-profit organisation, FICCI is the voice of India's business and industry. From influencing policy to encouraging debate, engaging with policy makers and civil society, FICCI articulates the views and concerns of industry. It serves its members from the Indian private and public corporate sectors and multinational companies, drawing its strength from diverse regional chambers of commerce and industry across states, reaching out to over 2,50,000 companies.

FICCI provides a platform for networking and consensus building within and across sectors and is the first port of call for Indian industry, policy makers and the international business community.

Federation of Indian Chambers of Commerce & Industry

Industry’s Voice for Policy Change

Mr. P. S. SinghHead-Chemicals &

Petrochemicals DivisionFICCI

Federation House, 1 Tansen MargNew Delhi-110001

Tel: +91-11-23316540 (Dir)Email: [email protected]

Ms. Rinky SharmaResearch Associate

Chemicals & PetrochemicalsFICCI

Federation House, 1 Tansen MargNew Delhi -110001

T: 011-23487473 (Ext: 473)Email:[email protected]

Contacts

Organization of Plastics Processors of India (OPPI) was established in 1984 to promote healthy growth of plastics in India. The members of OPPI form the backbone of Indian Plastic Processing Industry, contributing more than 40% of the total plastics processed in India. OPPI is involved in evolving policies with the government for growth of Indian Plastics Industry.

Organization of Plastics Processors of India (OPPI) has entered into MoUs with all leading Plastic Associations in the world. Organization of Plastics Processors of India conducts member-centric activities / programmes. The basic objective of all such activities is to help the members in their lines of production and also help them in business development.

Organization of Plastics Processors of India

Mr. Deepak LawaleSecretary General

Organization of Plastics Processors of India404/405, Golden Chambers,

New Link Road,Andheri (West), Mumbai - 400053. INDIA

Tel.: +91-22-66923131/32Fax: +91-22-26736736Email: [email protected]

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