Role of polymer in growth of Indian economy

Polymers are ubiquitous in todays world and have contributed to the improvement in the quality of life.
There is no human activity where polymer does not play a key role, from clothing to shelter, from
transportation to communication and from entertainment to health care.

Polymer, because of its many attractive properties, such as lightweight, high strength and ease of
processing, meet a large share of the material needs of man. The polymer generally known as plastic but
is very wide area of study compared to the latter one. The name plastic has been coined from
plastikos- a Greek word meaning capable of being shaped or molded. A very useful material. From
practically zero in the fifties, humankind today consumes close to one hundred and seventy five million
tones of plastics. Today we truly live in a 'Polymer Age'. Our daily lives would be very much poorer
without plastics, rubber and synthetic fibers.

Lets talk about something called economy, The English word ECONOMY derived from Greek
word which means household management the actual definition of economy is
An economy consists of the economic system of a country or other area; the labor, capital,
and land resources; and the manufacturing, production, trade, distribution,
and consumption of goods and services of that area.


Ever since 1957, the Plastics Industry in India has made significant achievements as it made a modest
but promising beginning by commencing production of Polystyrene. The chronology of manufacture of
Indian polymers is summarized as under:- 1957-Polystyrene , 1959-LDPE ,1961-PVC , 1968- HDPE
,1978-Polypropylene. Such potential Indian market has motivated the entrepreneurs in the country to
acquire technical expertise, achieve high quality standards and build capacities in various facets of the
booming plastic industry. The Phenomenal developments in the plastic machinery sector is coupled with
the developments in the petrochemical sector, both of which support the plastic processing sector.


This has facilitated the plastic processors to build capacities for the service of both the domestic market
and the markets overseas. Today Indian Plastic processing sector comprises of over 30,000 units
involved in producing a variety of items through injection moulding, blow moulding, extrusion and
calendaring. The Indian plastic industry has taken great strides and in the past few decades, the industry
has grown to the status of a leading sector in the country with a sizable base.
Plastic material is gaining notable importance in different spheres of activity and the per capita
consumption is increasing at a fast pace. Continuous advancements and developments in Plastic
technology, processing machineries, expertise, and cost effective manufacturing is fast replacing the
typical materials. On the basis of value added share, the Indian Plastic industry is about 0.5% of India's
GDP. The export of plastic products also yields about 1% of the country's exports. The sector has a large
presence of small scale companies in the industry, which account for more than 50% turnover of the
industry and provides employment to an estimated 0.4 million people in the country. Approximately
Rs.100 billion are invested in the form of fixed assets in the plastic processing industry.



The big story of the last century for India has been its arrival on the global scene. The Indian economy
had broken free of the low-growth trap from the early 1980s. By the mid-1990s, following the economic
reforms of 1991-3, India began to appear as a player of some significance in the global economy. Then,
Following the East Asian crisis of the late 1990s and from the first years of the first decade of the 21st
century there was no looking back. When, in 2009, the Group of 20 (G-20) was raised to the level of a
forum for leaders, India was a significant member of this global policy group.

Plastic industry, a product of post-world war II era of technological revolution, has played a key role in
improving quality of life everywhere in the world. In India, this was regarded as a 'sunrise industry' in the
Seventh Plan document. Since then, it has emerged as Rs 55,000 crore industry, employing directly and
indirectly over 3 million people and has achieved an export turnover of Rs 13,000 crore.
The industry provides vital inputs to all key sectors of the economy like agriculture, infrastructure,
healthcare and consumer goods. The industry offers cost effective products that help improve quality of
life for common man. One of the most globalized sectors of Indian industry, the plastic industry's
paramount role in meeting India's developmental challenges is widely acknowledged.


Plastic industry is one of the fastest growing industries in India playing a vital role in our economy. Next
two decades will witness unprecedented and explosive growth in all segments of this industry.

The industry witnessed incredible growth over past few decades. This was led by the need to find
alternative materials which were lighter, energy efficient, easy to process, more versatile and above all
'cost effective'. Besides computing, no other industry has grown as rapidly as plastics.
Indian economy contributes 5.6% GDP to the Global Economy and after liberalization of the economy in
1992; the Government of India has been quite supportive of industry in general, taking many steps over
the years for the conducive growth of business. These measures favoring economic growth are being
continuously taken by the Indian Government, irrespective of the change in power. The Government of
India is endeavoring to achieve GDP growth of more than 7% in the next 5 years.
.
Demand for plastic in India has tripled every decade since seventies. The historical growth of the plastics
industry over the last few decades is at an impressive 12-14%, which is twice the GDP growth. The major
driver of this growth is the increased standard of living of people in India. The GDP could increase further
with support from the Indian Government in the form of increased investments in industry.


India in 1195-96 consumes only 1.82 MMT plastic while in 2005-06 the consumption is around 4.47 MMT.
The consumption of plastic is increased by 9% in 10 years. While the GDP growth of India in the same
period is 6.3% only! the plastic industry has grown 1.5 times GDP. Polymer consumption of India in
domestic is around 12.75 MMT and exports around 4.2 MMT in 2012. The growth driver sectors are
Packaging which consume 15%of total plastic, Plasticulture 14%, Plastic in infrastructure 13% and Plastic
in consumer durables 10% and these are the sector which are expected to run the demand of plastic in
the next decades too.





After liberalization of the economy in 1992, the Government of India has been quite supportive of industry
in general, taking many steps over the years for the conducive growth of business. These measures
favoring economic growth, are being continuously taken by the Indian Government, irrespective of the
change in power. The Government of India is endeavoring to achieve GDP growth of more than 7% in the
next 5 years. It is quite possible that plastics could grow at 14%, based on historical performance.
The Petrochemical Department of the Government of India is in the process of setting up a development
council to promote the development of downstream sectors in India. This clearly illustrates that the
Government of India is quite positive and supportive to new investments in India in this sun rise industry.
In fact, many foreign entrepreneurs have been able to set up 100% owned companies in India in the
plastics processing and machinery industry sectors. Foreign equity participation in the petrochemical
industry has been increased to a 51% stake (a majority stake). However, the polymer manufacturers and
other downstream industries are free to set up projects 100% on their own equity. Some examples of the
international companies that have set up projects in India on their own are:
BASF Styrenics, Bayer ABS, LG Polymers, Clariant, DSM, Dupont, GE Plastics.

At present, the Indian petrochemical industry ranks 13th in the world and the Indian polymer industry
accounts for 2.5% of global production. Although Indian demand is small compared to global standards,
this is among the fastest growing markets in the world. Due to a larger presence of traditional materials,
there are greater opportunities for substitution and consequently accelerated growth prospect for the
polymer industry. India has shown a significantly higher growth rate in polymer consumption in the last
five years a rate, which is higher than in China and other Asian countries.

The main Giant big fish of the plastic industry is Reliance industry limited. It contributes to plastic industry
by providing 38% of total plastic required in India per year. While IPCL contributes 24%, Haldia contribute
for !9%, Gail is 6% and Finolex for 5%.


Indian plastic industry continues to grow at double digit rate well ahead of GDP growth. The Polyolefin
segment has shown a growth of about 20% in 2007 with consumption exceeding 3.5 million tonnes. This
segment continues to account for more than 60 per cent of total consumption. Apart from Polyolefins,
PVC consumption is in excess of a million tonne with other plastics accounting for the rest of the
demand.

The contribution of the plastic industry in the economic growth of countries the world over has been
tremendous. Typically, in an emerging market demand growth for plastics is 2 to 2.5 times the GDP
growth. Sadly, this has not been the case in India where the growth at times has been lower than the
GDP growth. . The primary reason for lower plastics industry growth in India is the reduced affordability of
polymers and articles of plastic on account of high incidence of indirect taxes compared to other
economies. The tax incidence in India (16 per cent excise duty + state VAT) at over 30 per cent is one of
the highest in Asia Pacific region, which is hindering growth in domestic polymer demand despite
miniscule per capita plastics consumption. The per capita consumption of plastics in India at 5kg is much
lower than that of China which averages 25kg.







Now, some expectations from plastic industry in India.


2005 2015
Consumption of Plastic Polymers 4.7 Million Tonnes 18.9 Million Tonnes
Employment In Plastic Industry (Direct+ Indirect) 2.5 Million 9.5 Millions
Plastic Industrys Turnover Rs. 35,000 Crores Rs. 1,33,245 Crores
Export of Plastic Products US$ 1900 Millions US $ 10215 Millions
Contribution of Polymers and Plastic Products to the
Exchequer
Rs. 6200 Crores Rs. 15990 Crores


Now at the end,
The predominant role which plastic industry can play in meeting India's development challenges simply
cannot be ignored. Plastics, with its myriad advantages and applications offer enormous growth potential
in view of India's explosive growth and the fast changing lifestyle of its people. Plastics are here to stay.