Plastic trade shifts focus to exports

With the domestic market showing a sluggish trend, the Rs 25,000 crore Indian plastic processing industry is increasingly focusing on the export market.

"Gujarat is the plastic capital of India. It is the leading state in the country for the manufacturer of plastic and polymer. But the per capita consumption of plastic in India is very less as compared to other countries", said Hasmukh Patel, chairman, executive council, Gujarat.

"In India, the per capita plastic consumption ranges between two and five kgs as compared to the US where the per capita plastic consumption is more than 75 kgs," he said.

More than 30,000 polymer processors and 2,000 exporters had been actively exploring new avenues in the global market for the last few years.

According to them, export of plastic products from India has increased from $802 million in the last fiscal year to $940 million in the current fiscal year.

Given the current trends, the exports are expected to increase to $1,104 million by 2004-05, $1,497 million by 2005-06 and $1,721 million by 2006-07. Plastic moulded/extruded goods and plastic raw materials dominate the export basket of the Rs 25,000 crore Indian plastic industries.

The top five trading partners are the UAE, the US, China, the UK and Turkey.

Plastic products exported from India range from polyester film, plastic woven sack, laminates and writing instruments to floor coverings, cine X-ray positive/negative films and fishing nets.

A significant trend has been the growth of the UAE market, which replaced the US market in terms of consumption of Indian plastic products in the last fiscal year.

The UAE market grew from $61.29 million in 1999-00 to $188 million in 2000-01 and S223 million in the last fiscal year, representing 18.12 percent growth.

On the other hand, exports to the US slumped from $223 million to $131 million in 2001-02, registering a fall of over 41 per cent. More or less, similar trends have continued this fiscal year, market reports indicate. The market trends have prompted the domestic industry to take initiatives to study the reasons for the fall in the US market.

Plastics exporters' apex body, Plastics Export Promotion Council (Plexconcil), had recently undertaken a survey through the international management consulting firm, Frost and Sullivan.

According to the findings, the chief reasons for the poor offtake of Indian plastic products in the US include the perception that Indian plastic items are "very weak" brands and China becoming an increasingly preferred source for plastic products.

This highlights the need for the Indian plastic industry to launch a rigorous marketing effort in the US, which should be backed by investments in research and development activities so that a set of exclusive products are designed for the US market.

Another suggestion for making Indian plastic products more competitive in the export market is to permit the industry to import plastic scrap, which has been banned.

"India imports nearly seven to eight percent of its virgin polymer requirement from the international market, which is three times more expensive than plastic scrap. This will not only help reduce the quantum of imports of virgin polymers, but will also enable us to be competitive in the international market. The only way to compete in the existing scenario is on the strength of pricing," said Mohan K Jain, president of the All India Plastics Manufactures' Association.