The Current Packaging Industry Scenario

Given the global macroeconomic outlook, the packaging industry can be cautiously optimistic about a rebound. We see 8 to 10% growth in India in the intermediate term. India’s growth rebound will follow global trajectories. However, local factors like the offline to online shift will have a profound impact on the economic rebound and thus on the growth in the packaging industry. E-commerce enablement in India is now higher than ever before. It will have a spillover effect on growth in the packaging industry.

There are several constraints on the global packaging supply chain. One of the major factors is the evolving role of China as a net importer of kraft paper due to a surge in demand for both its domestic and global trade requirements. Polymer pricing has been volatile both globally and domestically. With greater adoption of sustainable packaging, paper prices have inflated over the last two years. This has also been the case in the Indian packaging industry. Furthermore, polymer manufacturing in India has a highly imperfectly competitive market morphology. Market share and production capacities are dominated by a quantity leader. It has repercussions on the pricing of packaging material procurement. Government intervention in the form of price ceiling can enable the pass-through of cost cushion from MSME suppliers to enterprise buyers and end customers.

There are two significant avenues for the Indian packaging industry to adopt technology. First is the manufacturing of packaging materials. Second is the digital transformation of the packaging supply chain. Technology adoption in the manufacturing of packaging materials can facilitate capacity expansion, bring economies of scale, and reduce unit costs. On the other hand, collaborative data sharing among the stakeholders in the supply chain can get greater visibility into demand and supply mapping across locations in India, pricing, and agile distribution. Stakeholders in the packaging industry can benefit by moving away from a siloed approach towards a digitally connected supply chain ecosystem. It will make the packaging supply chain more demand-driven and efficient.