INDIA IN THE WORLD OF THE TWENTY TWENTIES, PLASTINDIA DELHI 2006

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. The top polymer consumer in 2010 will be the United States, followed by China second, soon to become first however.

Consumption of all polymers in India will increase from 5 million tons in 2005 to 7.5 million tons in 2007, to double to over 15 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 five years. Now estimates should run higher, rather like 15 % Year, doubling in five years, like Europe and US in their heyday, 1955-1975.

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 Economic Zones.

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 started operations in 2004, for PE, first, ahead of the London Metal Exchange, LME, which launched plastics contracts by 2005. 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 are confined to PE-LLD and PP, but will gradually be extended to other polymers such as PE-HD, PE-LD and bottle-grade PET.

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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