India’s packaging industry is unboxing double-digit growth

• Higher disposable incomes and the pandemic has catapulted several businesses such as FMCG, pharmaceuticals, hospitals, and e-commerce in the past decade or so.
• Thanks to the growth in these businesses in India, the local packaging industry is in top gear.

India’s Packing Industry

India’s packaging industry had a market value of USD70 billion in FY20.

• This is expected to triple over the next five years, reaching USD205 billion by 2025.
• That is a Compound Annual Growth Rate (CAGR) of 25%-27% between 2020 and 2025.
• Packaging companies in India have quickly become fund managers’ and retail investors’ most sought-after companies.
• It has become the fifth largest sector in the Indian economy and considered to be one of the fastest growing.
• This business controls the first impression on the customer whilst purchasing a product.

Reason for growth of this industry

The primary reason behind these companies’ growth is orders from e-commerce firms.

• For e-commerce businesses, packaging has become crucial.
• It needs to be attractive, but it also needs to be robust to be carried through various delivery points before its final destination.
• The packaging industry has made steady progress not only in terms of profitability, but it is now catering to diversified industries besides e-commerce.

Packaging material segments

The industry can be classified under the 4 segments - paper, glass, metal and plastic.

Food and beverage packaging

• India’s beverage packaging materials such as glass and rigid plastics account for 70% of the total packaging market.
• PET(Polyethylene Terephthalate) is the most used material to pack water, accounting for around 55% of India’s packaged-water sector, which is projected to reach a CAGR of 4.17% to USD142.2 billion by 2023.

Pharmaceutical packaging

• The global pharmaceutical packaging market has been predicted to double to USD149 billion in a decade.
• India is one of the major markets currently producing a large quantity of plastic pharmaceutical packaging.
• There are two types of packaging material, namely, rigid plastic-packaging segment and flexible plastic-packaging segment.
• The rigid segment has been and continues to dominate the industry but over the past few years, the flexible-packaging segment has gained higher market share.
• The market for rigid plastic packaging in India has grown well in recent years and stood at about USD8 billion in FY18.
• The market is expected to grow to USD14 billion by FY24.

Packaging material revenue share

Plastic packaging has the highest share in the Indian packaging sector.

• The revenue share of plastic packaging is 64% while the revenue share of paper packaging is 18% of the total packaging revenue.
• Share of glass-metal packaging is expected to be stagnant.
• The Indian packaging sector, even in the pre-Covid era, was witnessing considerable growth.
• The primary organized players in the packaging industry are UFlex, Essel Propack, TPCL Packaging, Polyplex Corporation and Ester Industries.

Exam Track

Prelims Takeaway

• India’s Packing Industry
• Packaging Materials
• Pharmaceutical packaging
• Food and Beverage packaging

Mains Takeaway

Q. India’s Packing Industry is emerging as an omni present industry with presence in industries like Pharmaceutical, Food and Beverage and various industries that need packaging, Discuss.