For the Indian packaging industry, the financial year from 1 April 2023 to 31 March 2024 is yet another time frame to reevaluate and recalibrate its performance in the past year and expectations in the coming period. The resilience of the industry in the past three years is an outcome of a still emerging and growing economy that has handled the disruptions of the Covid-19 pandemic, the Ukraine conflict, supply chain disruptions, raw material shortages, and inflation reasonably well. Keep in mind that this was an economy that came into the pandemic at the beginning of 2020, on the back of seven relatively poor quarters of GDP growth.
India’s GDP reported performance numbers for the past year that oscillate daily between 5.6% and 5.9%, while the forecasts for the coming year vary from 5.8% to 6.3% and are likely to be continuously revised by the government, global institutions, investors, and soothsayers. For an economy that is accustomed to, and inured to VUCA, the disruptions are merely the ups and downs of business. And the packaging industry sits, in the main, in a premium position of continuous opportunity and growth from a low base.
In both consumer products and their packaging, there is a cyclical building up of capacities and the disruptive restructuring that arises from the combination of global events and a society emerging towards modernity. Nevertheless, it is an economy that together with the packaging industry has both the necessity and opportunity to play a significant part in sustainable energy, food security, and industrial production. While alternative energy plants, and especially solar, are on schedule to meet 2030 targets, the biggest challenge remains employment and job creation. Technology plays well for the industry and economy to be productive and sustainable – but it does not generate enough jobs, and the education and skilling gaps in India are still significant.
Flexible packaging
In our back-of-the-envelope forecasts (www.ippstar.org) for the flexible packaging and carton industries in India, we cannot overlook the softness in demand of the past quarter. The reasons are likely temporary but include the huge number of biaxial film lines that have taken capacity from approximately 1.3 million tons in 2019 to 2.6 million tons presently (approximately as of 31 March 2022). Lines are being installed each quarter in the next three years up to FY 25-26, which will add yet another 1.3 million tons. However, as we earlier feared and accordingly questioned some experts, demand has not kept up – and there is a glut in the market with prices softening.
The saving grace could be that many of the new lines are designed for adding coaters that can aid in the production of more easily recyclable films and laminates. The hope is that as the current Plastic Waste Management Rules (February and June 2022) take hold, the value-addition investments that these installations require, will be implemented and that demand for the slightly higher priced but more sustainable films and laminates will make these film lines more viable. The trend could also optimize the price and demand for the recyclable films monomaterial films that can be produced on the already imported blown film lines with MDO units that are currently underutilized.
Monocartons
On the monocarton side, robust capacity creation in the past year faced supply constraints from the press manufacturers and the inability of several customers to get their ambitious new plants constructed in time. Several of the two dozen machines are either waiting for buildings and foundations to be readied or on the high seas on their way to Indian ports. Nevertheless, it was a good year, especially for multicolor packaging presses, and this year’s installations, including the delayed machines, are likely to increase to around 30 – mostly of 6 and 7-color plus coater presses in primarily 104-106 cm, 97-98 cm, and 74-76 cm formats.
The discernable trends in carton packaging apart from increased automation are four: The increased use of litho-laminated cartons using micro-fluting but with extensive value additions in decoration that include metallic and special coating effects, and embossing. Two, an increased preference by converters who work for the pharma industry to go for 74-76 cm presses and increase their capacities in terms of colors and coatings for the more colorful and adjacent health and wellness markets.
Thirdly, there is a trend for longer presses, more 8 and 10-color presses are arriving as double coaters are catching on. Fourthly, brand owners and converters are looking at the carbon footprint of the process. Energy consumption and interdeck LED curing are being explored even while the end-of-press coaters continue to use hot air dryers.
Lastly, there is the trend of pharma companies investing in or supporting carton packaging plants adjacent to their manufacturing locations. In other words, product manufacturers see the value of packaging and want not merely just in time supply and reliability, but also a piece of the pie.
Naresh Khanna editor@ippgroup.in
