At present, the Indian Packaging Industry is ranked 11th in the world, and industry experts expect it to become the fourth largest market worldwide with a revenue of USD 43.7bn in 2016. A great deal of this development can be attributed to the food and beverage and pharmaceutical segments, which occupy the largest share in the packaging industry accounting for 85% and 10%, respectively.
The rising demand for packaged products results from a growing middle-class, an expanding customer friendly retail market, increasing industrial output and strong exports as well as rising incomes, urbanization, opening of shopping malls, and most importantly a young population. The increasing awareness regarding safe food drives the growth of the corresponding infrastructure for packing, packaging transport and refrigeration. Moreover, India’s middle class population is estimated to increase from 50 million presently to 583 million in 2025 and that is expected to give a boost to the consumption of packaging materials as well.
As per a CD Equisearch report, the flexible packaging business in India is highly fragmented and has many small players, 22.000 in total, despite a trend towards consolidation and recent mergers between competitors to increase scale and improve bargaining power with customers. The total market size in India is Rs 240bn (this translates into 1.2mt-1.4mt). In real terms, this means, the topmost players (in the organised sector) account for less than 16% of the industry. This means, as much as 50% of the industry is still unorganised.
The Packaging Sector is one of the fastest growing industries as it spans almost every industry segment. India’s packaging consumption has increased 200% in a decade, from 4.3 kg per person per annum (pppa) to 8.6 kg pppa, according to the industry body “Indian Institute of Packaging” (IIP). The flow of foreign investments in the food and packaging industry is continuing to grow as well: for the period from April 2014 to January 2015 it was 421,5 million $. Within the project “Make in India” the Government invites foreigners to invest in the processing industry and allows FDI up to 100% as well.
The sector is increasingly becoming technology-orientated with innovations driving the market. This will lead to packaging that increases shelf life, reduces cost and is light weight. To maximize the potential that Packaging represents, the Indian Government is in consultation with a number of industry experts. For example, PIAI is formulating effective policies and guidelines aimed at helping Indian companies gain in the international market.
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