Faced with a 9.4 percent contraction in shipments in the April-November 2023 period, India’s plastic exporters are eyeing duty-concessional trade agreements to increase competitiveness and penetrate potential overseas markets for future export growth. Indian exporters sense immense opportunities in the Latin America, CIS, and African markets for a robust business. Concurrently, the Middle East, Central Africa, Europe, and South American markets offer significant opportunities for India’s plastic products.
According to the apex industry body monitoring plastic exports, The Plastics Export Promotion Council of India (Plexconcil), under the Union Ministry of Commerce & Industry, India’s shipments of plastic products declined by 9.41 percent to US$7.41 billion during April-November 2023, compared to US$8.18 billion reported in the corresponding period last year. If the same trend continues throughout the rest of the financial year ending March 2024, India will end up with a 7.14 percent contraction in plastic exports during the financial year 2023-24, marking the third consecutive year of decline.
It is worth mentioning here that India’s plastic exports might rebound based on the aggressive attempts being made by exporters to penetrate newer markets. India witnessed a staggering 36 percent growth in plastic exports to a record US$13.35 billion in the financial year 2021-22 from US$9.86 billion in the pandemic-affected financial year 2020-21. Following this record, India’s plastic export declined to US$11.97 billion in the financial year 2022-23, attributed to global economic uncertainty, high interest rates, and the lack of government support for this unorganized players-led sector to prosper.
| India’s plastic fact file |
| Particulars | Volume |
| India’s actual plastic consumption (2021-22) | 20.89 million tonnes |
| Consumption projection for 2022-23 | 22 million tonnes |
| Scrap generation (per year) (A) | 9.46 million tonnes |
| Cumulative mishandled volume burnt, buried in landfills, and incinerated (@40% per year) | 3.78 million tonnes |
| Cumulative scrap for recycling (@12% of A) | 450,000 tonnes |
| Registered recycling units with CPCB | 4,953 Unit |
| Un-registered recycling units | 823 Unit |
| Handling by the informal sector | 42-86% |
| Large corporate such as Godrej & Boyce, Nestle India, Dabur, and HUL, among other, have achieved | 100% carbon neutral or, plastic-free |
| India’s Pledge for net-zero | By 2070 |
Sources: Industry, and websites of individual companies; CPCB = Central Pollution Control Board
Potential trade negotiationsThe ongoing negotiations for a possible Free Trade Agreement (FTA) with the four-nation European Free Trade Association (EFTA) bloc are in the advanced stage of finalization. According to industry sources, both sides have reached a shared understanding of key issues, with only some cosmetic changes remaining. The four-nation EFTA members include Iceland, Liechtenstein, Norway, and Switzerland. Both sides have been negotiating the duty rationalization pact since January 2022 to boost economic ties, officially dubbed as Trade and Economic Partnership Agreement (TEPA). Sources said that carbon tax was a major bone of contention between India and the EFTA.
Similarly, the next round of India’s trade negotiations with the South American nation, Peru, for a possible Free Trade Agreement is expected to take place on February 12, 2024. The proposed agreement aims to promote bilateral trade and investments between the two countries. The ongoing visit of French President Emmanuel Macron as the chief guest for India’s 75th Republic Day celebrations is likely to give a fillip to the ongoing talks for a comprehensive trade agreement between India and the European Union. France is a key member of the 27-nation bloc of the European Union. India is also aggressively looking at a duty concessional trade agreement separately with the United Kingdom, Switzerland, United States, Oman, and other countries in the Middle East, following a successful implementation of the Comprehensive Economic Partnership Agreement (CEPA) with the United Arab Emirates (UAE) in 2022.
| India’s product-wise share of plastics exports |
| Products | Share (%) |
| Raw material | 30 |
| Films and sheets | 15 |
| FIBC, woven sacks, fabric tarpaulin | 13 |
| Consumer and houseware products | 6 |
| Human hair and related products | 6 |
| Packaging items | 5 |
| Others | 24 |
Source: The Plastics Export Promotion Council of India (Plexconcil)
Ambitious targetEncouraged by several initiatives taken by the industry, Indian plastic exporters have set an export target of US$25 billion by the financial year 2029-30. However, this target looks ambitious, especially considering the ongoing uncertainty in the global economy. Plexconcil’s Executive Director Sribash Dasmohapatra, is confident of achieving this target with some additional efforts. “We are sure that we will be able to achieve this goal of US$25 billion in exports by 2030, for which we are using a multi-pronged strategy to promote exports. Indian exporters are exploring new markets such as Latin American countries, CIS, and Africa to boost plastic exports from India,” said Dasmohapatra.
Another leading industry body the All India Plastics Manufacturers’ Association (AIPMA) estimates India’s plastic market size currently at Rs 3.5 lakh crore which has the potential to triple to Rs 10 lakh crores by the financial year 2027-28. AIPMA forecasts India’s plastic exports to reach Rs 1 lakh crore in the next four years from Rs 40,000 crore presently. Meanwhile, India has identified 553 plastic products for import substitution, totaling worth Rs 37,500 crore worth of imports. According to an AIPMA official, India has the potential to emerge as a global plastics supplier. Both the industry and the government are working together to further accelerate growth and create a sustainable environment for the Indian plastic industry to become the global sourcing hub.
| India’s plastic exports |
| Financial year (April-March) | Value (US$ million) |
| 2023-24* | 7.41 |
| 2022-23 | 11.97 |
| 2021-22 | 13.35 |
| 2020-21 | 9.86 |
| 2019-20 | 10.00 |
| 2018-19 | 9.34 |
| 2017-18 | 7.58 |
Source: The Plastics Export Promotion Council of India (Plexconcil); *April-November 2023
Economic headwindsThe World Economic Forum (WEF) in its 54th annual meeting held from January 15 to 19, 2024, observed that global economic prospects continued to remain subdued and fraught with uncertainty. A majority of economists expect the pace of geo-economic fragmentation to accelerate this year, with a new stoke of volatility in the global economy. Increasing geopolitical tension may cause an eruption of localization of the market, and create a North-South divide in the next three years. The world economy was also impacted negatively by the pirates’ attack on merchant ships in the Suez Canal in the Red Sea.
According to the latest Chief Economists Outlook report, the global economy grappled with headwinds from tight financial conditions, geopolitical rifts, and rapid advances in generative artificial intelligence (AI). Saadia Zahidi, Managing Director of the World Economic Forum, stated, “Amid accelerating divergence, the resilience of the global economy will continue to be tested in the year ahead. Though global inflation is easing, growth is stalling, financial conditions remain tight, global tensions are deepening and inequalities are rising – highlighting the urgent need for global cooperation to build momentum for sustainable, and inclusive economic growth.”
The WEF interviewed a large number of popular global economists and found 56 percent supporting ‘weakening’, while 43 percent foresaw unchanged or stronger conditions. With these divergent views, Zahidi concluded a precarious nature of the current economic environment. As per the WEF report, the outlook for Southeast Asia and the Pacific remains positive and broadly unchanged in the last few months, with a strong majority expecting at least moderate growth in 2024. Weak consumption may push China’s growth under check. The outlook for Europe has weakened significantly since September 2023, with the United States and the MENA (Middle East and North Africa) region sharing the same.
Aditi Gupta, an Economist with the Bank of Baroda believes that the flash Primary Manufacturing Index (PMI) of major economies signalled an improvement in economic activity. In the United States and the United Kingdom, flash composite PMI rose to a seven-month high, led by an improvement in both services and manufacturing activity. However, in the Eurozone, the pickup in activity was driven solely by the manufacturing sector, as services activity weakened.
Separately, the People’s Bank of China (PBOC) cut the reserve requirement ratio by 50 basis points (bps) to 10 percent., effectively injecting US$140 billion in liquidity into the banking system. The move is expected to provide much-needed support to the economy and pave the way for further policy measures. In India, both manufacturing and services PMI showed a strong improvement in January 2024. India’s domestic liquidity conditions continue to remain tight with a deficit at a record high of Rs 3.5 lakh crore. Aditi forecasted that the Reserve Bank of India (RBI) may resort to measures to infuse durable liquidity in the system due to increasing pressure on liquidity.
Multiple strategies to boost exportsIndian plastic exporters, under the aegis of Plexconcil, have adopted multiple strategies to boost shipments in the future. The premier industry body is organizing a buyer-seller meet and a reverse buyer-seller meet in each of the Latin America, CIS, and Africa markets to showcase innovative products to the consumers of these markets. Presently, the United States, Europe, and the United Arab Emirates are the three top buyers of India's plastic products.
Plexconcil also organized an export-focused event for plastics – PlexConnect 2023 from June 15 to 17, 2023, which saw 400 delegates participating from 51 countries, materializing additional export orders worth US$16.3 million. Special meetings were facilitated with delegations from Azerbaijan, Cameroon, Israel, Kyrgyzstan, Myanmar, Nepal, South Korea, and Uzbekistan. All of them evinced interest in engaging businesses with India. India’s plastic exporters’ body is planning to organize a similar event in 2024 with expectations of 1,000 buyers from across 100 countries. Indian plastic exporters are planning to display homeware, engineering plastics, and fiber-reinforced plastics (FRP) to overseas buyers.
In yet another initiative, a Plexconcil team visited several potential countries including Costa Rica, Guatemala, and Mexico to push India’s innovative designs and attractive products. According to industry sources, Plexconcil officials will visit African countries such as Kenya, Madagascar, Nigeria, and other neighbouring nations in the financial year 2024-25. Additionally, Plexconcil is also planning to make inroads into the former Soviet Union with CIS being an important market. A separate delegation is expected to visit Russia to explore the market there, which imports US$14 billion of plastic products annually, and India’s presence remains negligible.
DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com
