The export of plastics is expected to reach US$ 10 billion by 2015-16. Even the rubber industry is expecting to do better in the coming years.

With the manufacturing of rubber products from the year 1920 and production of polystyrene in 1957, both the plastics and rubber industry in India has made a positive mark in the domestic as well as international markets. Today, these industries have gained a positive sign in terms of demand and exports. This has been possible due to the economic policies being pursued by the government and the market integration brought about by the WTO/Regional Trade Agreements. Today, India is the fourth largest producer of natural rubber and the third largest consumer of the polymer. The rubber industry comprises of about 450-500 large and medium scale units. There are nearly 5,500 small and tiny units. Maharashtra has the highest share of over 16 per cent in the total rubber product factories, closely followed by Tamil Nadu with 15 per cent and Kerala with 13 per cent. Tamil Nadu employs the most number of people (36,000) engaged in manufacturing of rubber products followed by Maharashtra with 15 per cent and Andhra Pradesh with 9 per cent. The plastic industry in India employs about 4 million people and has over 2,000 exporters. It operates more than 30,000 processing units, of which 85-90 per cent is small and medium enterprises (SMEs). The size of plastic industry is estimated at US$ 6.6 billion.

Demand

As the plastic and rubber industry is flourishing by leaps and bounds, there is a huge demand in India as well as globally. The plastic industry of India covers a large area ranging from aerospace to electronics industry. Plastic piping systems are getting widespread acceptance in India. Large-scale consumption of plastics is also noticed in industries like auto, packaging (including bulk packaging), plasticulture applications, electronic appliances, etc. There are regional diversities in terms of consumption. Western India accounts for 47 per cent, Northern India for 23 per cent and Southern India, 21 per cent. The demand for plastic is also expected in other parts like Rajasthan, Punjab, Haryana, Uttarakhand, J&K and Himachal Pradesh. Further, the demand is expected to grow based on the increasing availability of feedstock and higher focus on manufacturing sectors.

Even the consumption of rubber in India is growing steadily. The total rubber consumption (both natural and synthetic rubber) in India stood at 14 lakh metric tonnes in 2012-13. The natural rubber/synthetic rubber consumption ratio is 75:25, while globally the ratio stands at 44:56. The tyres and tubes and belts manufacturers are the major consumers. According to Rajiv Budhraja, Director General, Automotive Tyre Manufacturers Association, the estimates indicate: "The natural rubber consumption is expected to reach above 1 million tonnes in 2014-15, up from 981,520 tonnes last year." The automotive tyres sector consumes over 50 per cent of all kinds of rubber produced, while the bicycles tyres and tubes industry accounts for 15 per cent. The footwear industry consumes around 12 per cent of the rubber produced. Belts and hoses consume 6 per cent, and the camelback and latex products account for around 7 per cent; and around 10 per cent of rubber is consumed by the other products.

Imports

The demand for natural and synthetic rubber is increasing at a greater pace. Production of the same is not matching the growing demand. This gives rise for an urgent need to import around 1 lakh million tonnes of natural rubber. This helps bridge the demand-supply gap and thus stabilise the situation. According to Anu V Pai, Research Analyst, Geojit Comtrade, "The off-take by the tyre sector from the local market has stayed subdued for long, despite rise in natural rubber consumption. This is because the industry depended heavily on imports to meet the rising demand."

During March 2013, India imported around 325,190 tonnes of natural rubber from Thailand, Malaysia, Indonesia and Vietnam. Indonesia alone accounts for about 42 per cent of India's total natural rubber imports followed by Thailand with 26 per cent and Vietnam with 24 per cent share. With the import growth, the natural rubber industry is expected to touch $1,107 million by the end of FY2014-15. So far, India has imported about $734 million of natural rubber during first nine months of FY 2013-14, according to ASSOCHAM reports.

Plastics are also been imported from countries like Saudi Arabia, Qatar, UAE, Korea, USA, Singapore, Thailand, Germany, Spain and Malaysia. This is because; India is deficit in PE, PVC and engineering plastics. In FY13, around 2.3 mn tpa of PE was produced while domestics consumption was approximately 3.4 mn tpa. In case of PVC, the domestic demand stood at 2.1 mn tpa in FY13, while the domestic production was 1.2 mn tpa.

Exports

Though the industry many a times finds a shortage of plastics, but a few materials are produced in surplus. In FY 13, Indian production of PP stood at 2.5 mn tpa while demand was 2.1 mn tpa only. Similarly, domestic demand for PS/EPS was 340,000 tpa, while production was 400,000 tpa. The industry exports a wide range of raw materials, plastic moulded extruded goods, polyester films, laminates, moulded/soft luggage items, writing instruments, plastic woven sacks and bags, PVC leather cloth and sheeting, packaging, consumer goods, sanitary fittings, electrical accessories, laboratory/medical surgical ware and travel ware, etc. These materials are exported to around 150 countries international markets, major trading partners being China, the US, the UAE, Turkey, Italy, the UK, Indonesia, Germany, Vietnam, Bangladesh, Nigeria, Pakistan, South Africa, Brazil, Singapore, Saudi Arabia, Nepal, Egypt, Sri Lanka and the Netherlands. In 2012-13, exports of Indian plastics stood at over US$ 7.2 billion. It is expected to reach the US$ 10 billion by 2015-16.

The export share of rubber has also increased tremendously over the years. The volume increased during 2012-13 to 30,451 tonnes from 27,145 tonnes shipped in the previous year. India's exports of rubber products, which include tyres exceeded Rs 2,000 core. Other products exported includes automotive tyres and tubes, rubber and canvas footwear, cycle tyres, pharmaceutical goods, rubber hoses, cots and aprons, belts and beltings, and sheeting. Since the Indian rubber industry is expected to witness a positive outlook, there is a huge scope for expansion and development, as well as exports in coming years.

State scene

Kerala presents the maximum availability of natural rubber to the industry. The state also has a number of small-scale units involved in rubber processing and manufacturing. The state (Kerala) government has recently taken steps to make it more attractive to investors. Tamil Nadu could be another attractive option, given its track record in attracting investment, and proximity to Kerala. For Plastics, Gujarat and Maharashtra appears to be attractive, both from the proximity to raw materials, as well as policy support for investments.

Challenges

The Indian plastic industry consists of nearly 75 per cent of unorganised players. The segment faces environmental myths and lacks in technology. The packaging industry in India has seen a strong penetration of plastics as compared to global standards. However, agriculture sector still has not explored the benefits of plastics to a large extent. Global average for plastics demand in agriculture is approximately 8 per cent while India is substantially lower at only 2 per cent. Therefore, recycling and reuse of plastics could be a better alternative towards innovation and sustainability. Also increased awareness through help of industry groups and Government could help to resolve such challenges. The consumption of natural and synthetic rubber is constantly increasing whereas the production is not matching the growth in consumption. Therefore a lot of efforts are still needed from the industry players to meet the rising demand. This will also help to decline the dependence on import. The other challenges that the rubber industry faces is the non-stability of rubber price, lack of man power, cheap imports of rubber products made out of factory waste of synthetic rubber in China, and many more.