Flexible packaging demand in India, estimated at nearly US$ 5.6 billion in 2017, is expected to grow annually by 10% over the next five years according to a study by PCI Wood Mackenzie. The ‘Flexible Packaging Supply Demand Study – India’ report says the Indian economy has slowed down in 2017, citing the demonetization of late 2016 and the GST rollout in July 2017. The report says that in light of demonetization and the introduction of GST, the unorganized sector of the Indian economy will struggle to function in its current form and likely grow more slowly over the next five years in comparison to earlier rates of growth. On the other hand, the study expects the more organized sectors to deliver strong demand growth in the next five years.
It further states that together with the introduction of GST, which is designed to simplify the country’s complex and state-wise taxes, regulations for Foreign Direct Investment (FDI) have been eased, which should help drive demand for flexible packaging in the Indian market. The economy will see double-digit growth in sectors such as meat, poultry, fish, medical and pharmaceuticals that operate mainly in more structured or organized markets. The study expects the government to clamp down on what it calls ‘ethnic chewing tobacco’ due to the public perceptions of health risks and a concomitant decline in flexible packaging in this segment.
Overall, the PCI Wood Mackenzie study foresees a decline in the unorganized sector’s demand for flexible packaging, while it sees gains emanating from the government’s support to the food processing industry as well as improvements in infrastructure and logistics. At the same time, the study attempts to take cognizance of the changes in the market as it comes to terms with the new GST regime.