CCI INDIA

Business Intelligence, Policy Advocacy, Networking, Business Expansion

Packaging

Introduction

Packaging is among the high growth industries in India and developing @ 22-25% per annum and becoming a preferred hub for packaging industry. Currently the 5th largest sector of India's economy, the industry has reported steady growth over past several years and shows high potential for much expansion, particularly in the export market. Costs of processing and packaging food can be up to 40% lower than parts of Europe which, combined with India's resources of skilled labor, make it an attractive venue for investment. A high degree of potential exists for almost all user segments which are expanding appreciably-processed foods, hard and soft drinks, fruit and marine products.

The Indian packaging industry has made a mark with its exports that comprise flattened cans, printed sheets and components, crown cork, lug caps, plastic film laminates, craft paper, paper board and packaging machinery, while the imports include tinplate, coating and lining compounds and others.


In India, the fastest growing packaging segments are laminates and flexible packaging, especially PET and woven sacks. Over the last few years Packaging Industry is an important sector driving technology and innovation growth in the country and adding value to the various manufacturing sectors including agriculture and FMCG segments. The global packaging industry is developing and expanding day by day and Indian packaging industry is also growing at rapidly. This growth is primarily driven by factors like growing pharmaceutical, food processing, manufacturing industry, FMCG, healthcare sector and ancillary in the emerging economies like China, India, Brazil, Russia and few other East European countries. In line with the gro­wth in e-commerce, the transit packaging industry is set to quadruple by 2020. Organised players stand to gain, as the smaller players may not be able to meet the quality and volume requirements from the e-commerce sector.

Demand for transit pa­ckaging in India is set to witness unprecedented gr­o­wth as a result of the rapid strides in e-retailing. Practically non-existent a de­cade ago, the pace of gro­wth in e-retailing has pic­ked up in the country and has given rise to this fledgling segment in the packaging market. However, global developments in the sector are yet to unfold in a large way in India. Despite the strong growth exhibited over the last few years, the industry is still at a nascent stage and is poised to become a fast growing and meaningfully large segment over the next few years, finds the study.

There are only a handful of organised players catering to the e-commerce segment – the industry is highly fragmented with the presence of a number of small scale and unorganised players. At its current state, the unorganised sector is not well geared to cater to the expected growth from online channels – this will necessitate a transformation in the very nature of the industry going forward. The multi-fold increase in the number of shipments will inevitably give rise to an ecosystem of organised players of scale that have the ability to cater to large volume requirements of requisite quality, according to the study. With heightened awareness, the need for eco-friendly and sustainable packaging is steadily on the rise.

With several billion parcels delivered every year, the mountain of packaging waste that gets generated necessitates the use of recyclable packaging material along with mechanisms for collecting the packaging waste. It is estimated that India has more than 22,000 packaging manufacturers leading to significant competition at the regional level. Most of the product packaging in India has little-to-no product differentiation and there is intense competition among smaller players based on cost competitiveness and pricing of the products. Additionally, regulatory focus on sustainability will increasingly necessitate the use of recyclable material.