PackSourcing- Global packaging & food industry trade B2B marketplace, provide suppliers, products and related news information.

The growth in the packaging industry in India is mainly driven by the food and the pharmaceutical packaging sectors. The large and growing Indian middle class, along with the growth in organized retailing in the country are fueling growth in the packaging industry. Another factor, which has provided substantial stimulus to the packaging machinery industry is the rapid growth of exports, which requires superior packaging standards for the international market. With this the need for adopting better packaging methods, materials and machinery to ensure quality has become very important for Indian businesses.

The Indian packaging industry is dominated by plastic flexible packaging. The traditional rigid packaging users have also been seen to shift to flexible packaging in recent times. Consumer preference for the use of convenient packaging and packaged products in affordable quantities in laminates is also one of the main reasons that have contributed to the growth of flexible packaging in India. The food-processing sector is the largest user of flexible packaging, accounting for more than 50 percent of the total demand. The flexible packaging segment is estimated to be growing at over 35 percent annually. Major players in the flexible packaging sector are Paper Products Ltd. and Flex Industries.

Three specific segments can be identified for opportunities in packaging equipment in the Indian market. The unorganized sector represents the larger opportunity, given the increasing quality-consciousness of end customers. The cost of equipment and upgrades hold the key to success in this segment. Large companies, primarily the multinational corporations, which comprise another segment would be guided for the choice of such equipment by the global policies and standardization of their parent company. The organized segment, which caters to the major food and pharma companies are conscious about quality and the ability to produce various packaging products, thereby enabling them to address a larger market.

The Indian market for packaging equipment is characterized by a few large manufacturers with a nationwide presence along with a large number of small players in the unorganized sector with a regional presence. There are approximately 700 packaging equipment manufacturers in India, 90 to 95 percent of which are in the small to medium sector located throughout India. Imports of packaging equipment to India are currently over $130 million. Major suppliers of packaging equipment to India are Germany, Switzerland, and Italy. Other major suppliers of packaging machinery to India include Taiwan, Korea, China, and the U.S.

Increasing investments by both domestic and foreign companies in the Indian food processing sector, especially in beverages, dairy products, processed food, edible oil, and marine products have expanded the market for packaging machinery.

Packaging machines such as automatic form-filling and sealing machines, tetra pack aseptic packaging machines for sterilized filling and packing of liquids, and testing instruments offer considerable business opportunities. The Indian packaging machinery manufacturers in the unorganized sector mostly fabricate general-purpose equipment to serve the basic needs of the industry.

One area that has been identified as having good market potential is equipment for manufacturing aluminum beverage cans. Machinery for cleaning and drying containers; automatic high speed labeling machines and capping machines; sealing machines for cans, boxes, and other containers; machinery for filling, and closing bottles and cans; packing/wrapping machines; and moulding machines also offer good prospects.

The major equipment suppliers to the Indian market include Germany [with a 42 percent share], Italy [20 percent share], Switzerland [eight percent share], and others including Taiwan and the U.S. [the remaining 30 percent]. Imports from the U.S. according to industry sources account for approximately five to seven percent, totaling approximately $8 million.

The end-users may be classified into two sections. The first is the primary section, which may be further sub-divided into manufacturers of rigid and flexible packaging products. The second section is comprised of converters of packaging materials or manufacturers that print polyester or BOPP films. The conversion sector is primarily small-scale and is dominated by companies in the unorganized sector. This industry converts materials such as plastics, paper, and aluminum into packaging materials. Economies of scale and the quality level of the converted final packages represent entry barriers to the conversion sector. Because entry requirements are not very high as far as technology and capital costs are concerned, it has been estimated that there are approximately 16,000 players in the unorganized sector alone, accounting for approximately 45 percent market share.

Distribution methods have taken on two basic forms. The first form caters to the demand of many organizations in the organized sector, which is being met largely by a few select packaging companies in the organized sector and several in the unorganized sector. Because the unorganized sector is a prime segment for packaging machinery equipment, the distribution channel needs to be able to meet that demand as well. Manufacturers of indigenous equipment in the unorganized sector could be prospective partners for U.S. equipment manufacturers.

For new entrants to this industry, joint ventures with Indian companies will provide the necessary resources to address specific issues such as liaison with Government agencies and procurement of local products/components and related tasks. For expansion projects, the knowledge of the Indian partner regarding local procedures helps in positioning the product accurately.