INDIA AND THE GLOBAL
PLASTICS SUPPLY CHAIN, EMAP, LONDON 2004
Françoise Pardos, Pardos Marketing, February 2006
India in the world
No one really doubts the potential of the Indian market.
To summarize, India is expected to emerge as the world third largest
polymer consumer by 2010. According to Kishor Jhalaria, of Reliance,
at the 2nd International Middle East Petrochemicals Conference in
Dubai, in October 2003, the top polymer consumer in 2010 would be
the United States, followed by China second.
Consumption of all polymers in India will increase from 3.55 million
tons in 2003 to 7.3 million tons in 2007, to double to 14 million
tons by 2012. Demand for India polymers has outpaced gross domestic
production by two to three times in the past two decades.
According to Fitch Ratings India, in April 2004, there is going
to be a shortage of 2 million tons of commodity polymers in the financial
year to 2006. In a study entitled “Beginning of a Recovery,
the Indian Polymer Industry”, Fitch said it expected domestic
demand for polymers to grow at 12 % a year over the next
Also, the Indian Department of Chemicals & Petrochemicals DCP
has planned a number of initiatives to increase per capita plastic
consumption in the country to 12 kg by 2010 from the present 2.5
kg, to make India the third largest plastics market in the world.
The proposed initiatives include providing subsidized loans to plastic
processors to help with modernization, setting up of a Plastic Development
Council PDC, encouraging the establishment of plastic export parks
and creating plastic recycling clusters.
The initiatives form part of the draft national policy on petrochemicals
prepared by DCP taking into account recommendations of Petrochemicals
Vision 2010 Advisory Group. The draft policy has proposed grant of
5% interest subsidy on bank loans to plastic processors for the technological
upgrading of their operations. The proposed PDC would coordinate
the efforts of different organizations to develop new applications
for various polymers.
Central Government will give financial aid to state governments
that help to set up of plastic export parks in Special
Plastics prices and futures
India also took an interesting initiative by being the first to
launch a plastics price exchange in Asia. The National Commodity
and Derivatives Exchange NCDEx of India aims to start operations
in 2004, for PE, first, ahead of the London Metal Exchange, LME,
which plans to launch plastics contracts by the end 2004. The aim
of the LME is to offer producers, traders, converters and end-users
a vehicle to hedge against price volatility. Initially, the futures
contracts will be confined to PE-LLD and PP, but will gradually be
extended to other polymers such as PE-HD, PE-LD and bottle-grade
Singapore and Johor have been selected, when the major markets in Asia
are in China and Hong Kong, but China was not seen as meeting the LME
criteria legal infrastructure and customs requirements.
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