The last financial year proved to be tumultuous for the plastic industry. Reduced off-take of plastic products from key consuming sectors like auto components, packaging, processing, consumer products and the industrial sector had an adverse impact on the bottomline and topline growth of SME plastic units.
Besides dwindling demand, the shortage of raw materials and unstable prices in the overseas markets added to the woes of the plastic export sector. Furthermore, it is feared that miseries of small-scale plastic producers in India will be further prolonged as industry analysts see no change in the scenario for the current financial year. Experts’ predict that plastic exports will fall by 11-12% in 2009-10 as the recessionary pressures on the global front show no signs of abating.
Bleak export growth projections
Industry association Plastindia projects lower sales and muted revenue earnings for small and mid-sized plastic product exporting firms in 2009-10.
“A marked improvement in the demand graph for
Plastic Products in the overseas markets seems unlikely as the traditional markets of the US and Europe are still weak. It will take some more time for the export sector to recover from its current battered state. In addition, the negative market sentiment prevailing worldwideis expected to impact the annual export performance of Indian plastic SMEs,” said KK Seksaria, President of the Indian Plastics Federation (IPF).
Besides reduced demand, price fluctuations and lower supplies of polythene and polypropylene are also anticipated to continue for some time and affect the overall growth prospects of the industry for the current financial year.
“The scarcity of primary inputs and the volatility in the international markets will make it difficult for Indian plastic exporting firms to enjoy a smooth ride in 2009-10,” said M Jajoo, proprietor of India Plastic Products, a small-sized plastic manufacturing unit in Kolkata.
Going by the industry reports, it has become imperative for the government to initiate an export-led growth strategy and take steps to improve the overall supplies of raw materials for the domestic plastic sector.
SMEs in the industry also need to explore opportunities to enter into partnerships and joint ventures with international plastic manufacturing firms to produce cost-effective and eco-friendly products. With resurgence in the export market seeming to be a distant reality, the Indian SME plastic sector is advised to tread with caution.
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