India’s packaging market is about Rs 40,000 crore with an average growth of 15 percent per annum. The market place is dotted with an array of Indian and International companies co-existing with a vast number of small and medium local companies.

The above growth rate is expected to double in another two years. Growing consumerism, an expanding middle class and large-scale retailing is driving the market.

Packaging is different from mere “packing”. In today’s visual society, survival of a product hinges on smart packaging. The highly visible and catalytic role of packaging is abetted by the widespread branding of products and also the rapidly changing consumer preferences.

On an average, packaging costs constitute 45 percent of the final price of the product. The dominant role of packaging can be inferred from World Packaging Organisation’ s (WPO) slogan, “Better Quality of Life Through Better Packaging”. No consumer product bereft of a nice packaging can survive; it must also meet the criteria of safety, convenience and attractiveness to think of attaining a decent market share.

Even though the organised sector has less than 5 percent of the total industry in its grip, in terms of volume, it has about 70 percent of the market in its hold. The organised sector has its presence predominantly in the laminated products comprising form-fill-seal pouches.

High Growth

India’s per capita packaging consumption is less than US$15 compared to the world average of nearly US$100. The industry may manufacture or even import a wide range of packing material – paper, paperboard, cardboard, a range of polymer products including rigid and flexible packaging material, aluminium foil, tin and good old wood and steel. Packaging prolongs the quality and helps in lengthening the shelf life of all products.

The backward linkages offered by the industry include printing, labelling and binding/adhesive tapes. The machinery for processing these products and packaging is closely linked to this industry.

Fierce competition in various product sectors and a new thrust on exports have contributed to the rising demand for appropriate, at the same time cost-effective, packaging material and technologies.

Rigid and Flexi Packaging

In India rigid packaging rules the roost. More than 80 percent of the packaging constitutes rigid packaging, which is the oldest and the most conventional form of packaging. The Indian fascination for rigid packaging seems to be very intact.

Rigid packaging constitutes glass bottles, metal cans, aerosol cans, battery cell cans, aluminium collapsible tubes, injection moulded plastic containers made of PVC, PET, HOPE, barrels made from HOPE, paperboards, and corrugated boxes.

Flexible packaging is gaining wider acceptance because of the protection it offers against environmental threats like moisture, heat, and chemical reaction. The convenience factor in terms of handling the product and the cost benefits can be counted as the extra privileges.

Flexible packaging contains multi-layered laminated sheets of single or combination of substrates such as plastic, paper or aluminium. Flexible packaging finds varied use because of its ability to provide strength, moisture resistance, aroma retention, gloss, grease resistance, heat retention, sealability, printability and low odour.

Long Haul

The growth of flex-pack market is due to the bulging middleclass of over 300 million. The conversion of the traditional rigid packaging into flexible forms and a favourable government tax structure including the cut in excise duty from 24 percent to 16 percent has added positively to its growth.

Plastic is the most commonly used substrate in flexible packaging but environmental concerns are challenging its use. Paper and paperboard, as environment-friendly substances also enjoy the advantages of easy handling and efficient process implementation. But flexible packaging mandates additional capital requirements and technical know-how for efficient manufacturing operations.

India is ranked 15th in the world for its paper and paperboard consumption and the rank is set to improve. Paper is the fastest growing substrate segment with 6-7 percent growth. The current demand for paper is around 6 million tones. Of this, nearly 40 percent goes into the packaging industry. If the demand continues to grow at this rate, the total paper consumption in the country may touch 10 million tonnes by 2010.

Scope of Tin Plate

Tinplate packaging is another segment that is set to bulge; it now accounts for 7 percent of the packaging market. However, tinplate packaging is pregnant with deep potential and in the near future it may capture at least 10 percent of the domestic packaging market.

The changing lifestyles and growing surplus income levels of urban population across the country have the tinplate packaging industry doubling its share in the total domestic packaging industry in the next five years.

The food packaging industry worldwide meets 87 percent of its packaging requirements from tinplate. At present, the utilisation levels of tinplate in the Indian food processing industry are negligible but it is very promising.

There is no doubt that the future of the industry is quite rosy; an expanding middleclass, ongoing liberalisation and the arrival of organised retailing will continue to catalyse the growth in packaging. The new middleclass has spurred new patterns in consumption while escalating the demand for quality and convenience-based products.

The rising interaction with the developed world and the impact of mass media is also influencing the aesthetic and quality norms of the Indian consumer. Better consumption standards are firming up. The stimulation for the consumption of branded products is further spurting the use of both rigid and flexible packaging.

Changing Dynamics

Already in the zone of heightened growth, the Indian packaging industry is showing signs of a mature market. Here too the hot segments aiding the growth are food and pharma sectors. The traditional rigid packaging is fast migrating to flexible packaging in a big way. The laminated products including form-fill-seal pouches, laminated tubes and tetra packs are clocking a growth well above 30 percent per annum.

Then there are about 600 packaging machinery manufacturers. A majority are in small and medium sectors. From abroad, Germany and Italy continue to be the largest suppliers of packaging machinery to India. Taiwan, Korea and China have also emerged as notable suppliers. Indian packaging machinery imports are in the region of US$125 million.

As the growth heats up the industry, there are also several operational challenges such as the need to manage a large product variety, rising input costs, wastages in production, delivery and pricing pressures and the need to adapt to the constantly changing customer requirements.