India is the fifth largest economy of the world and aspires to become USD 5 Trillion economy in the near future. Growth of Indian economy depends upon its effective utilization of young and skilled manpower, land resources for sustainable agriculture and promoting the small and medium enterprises.
Global economic shocks in the third decade of this millennium has presented various economic challenges such as inflationary pressures, depreciation of most currencies, widening of current account deficits etc. These are leading to slow global growth and may lead to financial contagion emanating from advanced economies.
India is prepared to grow at its potential once the one-off shocks recede. Healthy balance sheet of financial and corporate sector, higher investment and consumption, Digitalisation reforms and resultant formalisation, India’s opportunity to gain from global supply chain diversification are main factors which can act as Growth Magnets in the period 2023-2030
The Indian agriculture sector has been growing at an average annual growth rate of 4.6 per cent during the last six years. In recent years, India has also rapidly emerged as the net exporter of agricultural products.
Uncertain climate, shrinking production, Ukraine Russia war and supply chain disruption are causing an increase in the price of agriculture commodities. The company engaged to store agricultural produce at harvesting season, store the same for 3-4 months and to sell on higher prices as and when demand increases in the market.
A large customer base, slow developing economy, vast middle class section of society and a growing population of youngster with spending power, sets India as an important target for any establishment seeking a market for its product and services. Several multinational establishments consider India as a prominent market that contributes significantly to their top line and bottom line reported financial figures.
The Indian plastic industry comprises of 30,000 processing units, 85-90% of which are small and medium enterprises, employing 4 million people. The market share of unorganised players remains high at 44%.
As per the latest available data, India consumes 20 million tonne of plastic every year with per-capita of 11 kilograms, which is well below the world average at 28 kilograms – the USA consumes a whopping 109 kilograms per-capita. Top plastic users in India are packaging (43%), infrastructure (21%) and autos (16%).
The global packaging industry was valued at US$ 1 Tn in 2021, while in India the industry size is expected to reach $204.81 billion by 2025 with CAGR 22% to 25%. Sale of packaging are concentrated in Asia and accounted for 37% of the total in value terms as of 2015. It accounted for 23% North America, 22% in Western Europe, 6% in Eastern Europe, 5% in South and Central America, 3% in the Middle East while Africa and Australasia each having a 2% share.
The Indian Plastic Industry is growing rapidly spanning more than 2,000 exporters. The industry comprises of about 30,000 processing units of which more than 85% is contributed by small and medium-sized enterprises. India is ready to have 18 plastic parks and the Government will be investing INR 40 Cr (US$ 6.2 Mn) to increase the domestic production of plastics. The Plastic industry in India produces raw materials, flexible, ridged plastic products that caters a wide range of industries like packaging, pipes and fittings, automotive components, medical and pharmaceutical, electrical components, FMCG, etc. Indian Export market for plastic products have increased from US$ 7557.68 Mn in 2016-17 to US$ 8850.18 Mn in 2017-18. The major importers are USA, China, UAE, Italy, Germany, Turkey, UK, Bangladesh, Nepal, etc. The Indian exports for plastic packaging grew at 12.50% YoY to US$ 670.75 Mn.
The global market for polypropylene (PP) woven bags and sacks market was valued at US$ 3,421.5 million in 2017. The market is expected to expand at a CAGR of 4.2% over the forecast period, 2018-2028. Growth in the Raffia industry is not just predictable but also desirable since it contributes to nearly the entire packaging solutions of bulk commodities like Cement, Fertilizer, Agriculture and Horticulture products, Chemicals, Polymers and building construction materials. Hence, the growth in these industries is directly proportional to growth in the Raffia industry..
Geographically, the global Raffia industry is segmented into five key regions – North and Latin America, Europe, Asia Pacific, Middle East, and Africa. Both India and China have the capability and capacity to supply to the Middle East, Western Europe, and Latin American countries. European companies operating in supply and logistics are heavily importing from the Asian-Pacific region.
Today, sustainability is the key to ensuring the protection of environment and conservation of resources for mother earth. Needless to say, Raffia products are more sustainable in characteristics than traditional materials resulting in conservation of precious resources. Raffia products are unique that they can be used multiple times and are truly Reusable and Recyclable.
Globally, the production of flat tape yarn woven fabrics is around 16.1 mMTA and it has grown at 4.8% CAGR over the last 5 years. The largest end-use market is represented by woven sacks for bulk packaging of cement, fertilizers, food grains, sugar, agricultural produce, animal feed, fodder, chemicals, petrochemicals, sand, minerals and ores, flour, seeds, nuts, and many more products of mass consumption. Other growing applications of flat tape yarn woven fabrics are Flexible Intermediate Bulk Containers (FIBCs), open mesh leno and raschel bags for packaging of agricultural produce, shade net fabrics, wrapping fabrics, tarpaulins, geotextiles, geomembranes, webbings, lifting slings, ropes, twines, stitching threads, etc.
The Indian Raffia industry has a nationwide spread, with more than 1270 units in small and medium scale enterprises. With an investment of ̴INR 28,000 crores, it employs about 13 lakh workers, with installed processing capacity of 2800 KTA, gross annual turnover of INR 30,000 crores and enjoys the reputation of making an important economic contribution to the country’s growth.
Today, the Indian Raffia industry has truly come of age. We are self-sufficient in raw materials, have energy efficient machinery, cost-effective processing technology and skilled manpower essential for sustainable growth. Many of the large-scale processors have already developed overseas network for export of raffia products and more and more processors need to explore the possibilities for export of woven fabric, sacks, BOPP film laminated sacks, wrapping fabrics, FIBCs and some speciality products like ground covers, lumber covers, waterproof roofing fabric, share nets, geotextiles, pond liners, carpet backing fabrics, artificial grass, etc..
The expected future growth in infrastructural projects and investment in real estate projects may facilitate increased consumption of cement thereby demand generation of plastics woven sacks for packaging of cement. With strong support from government for increase in agriculture yield, the future remains bright with prospects in fertilizers, food grain, horticulture packaging and shade nets. In addition, polymer packaging, FIBCs for bulk packaging and allied products like tarpaulins, wrapping fabrics, ground cover fabrics, ropes, twines, etc will add to the demand prospects of woven sack or Raffia products.
The PP/ HDPE Raffia industry is generally classified into the following main categories, depending on package type and end-use functions as:
1. Woven sacks for packaging of cement, fertilizer, food grains, sugar, polymers, chemicals
2. Flexible Intermediate Bulk Containers (FIBCs) or Big Bags
4. Wrapping fabrics
5. Other applications
Raffia sector is one of the key segments of the domestic polymer processing industry, contributing to growth of consumption of commodity polymers like Polypropylene Homopolymer (PP) and High-Density Polyethylene (HDPE). The domestic Raffia industry roughly contributes 15% of the domestic polyolefin consumption of around 13.5 mMT. PP contributing more than 82% of the total Raffia sector consumption.
The largest product category in the Raffia sector in India is Cement Packaging which consumes around 520 KT of polymer with 26% share and currently valued at INR 7600 crores. It is expected to reach INR 10,650 crores by 2024-25. The entire cement packaging segment is served by polypropylene woven sacks due to its higher stiffness, adaptability for hot cement packaging and better dimensional stability at higher temperatures. Currently, India is the second largest cement producers in the world after China with a total capacity of 509 million tonnes in 2018-19. With the Government of India giving boost to various infrastructure and irrigation projects, housing facilities and road networks, the Cement Industry in India is currently growing at a pace of 7% as per industry estimates.
Another significant segment in the India Raffia market is Fertilizer Packaging which consumes around 275 KT of polymer with 14% share of the Raffia consumption. This Raffia segment is expected to register a growth of around 6% for next 5 years. Laminated HDPE bags are predominantly used for packing fertilizers owing to better outdoor stability of HDPE than PP. With easy availability of UV stabilizers and suitable master batches at lower cost, recently PP made inroads into this sector and its share is growing as faster production rates are possible for PP woven sack manufacturing. In India, there are about 55 fertilizer units producing Urea, DAP, Complex and Ammonium Sulphate fertilizers. The total production of Urea fertilizer is ̴240 mMT and DAP and Complex fertilizers is ̴130 mMT, besides this India also imports sizable quantity of fertilizers. Considering local production and import, requiring 275 KTA of PP/ HDPE sacks currently valued at INR 3600 crores. Urea is predominantly packed in HDPE sacks, whereas, DAP and NPK fertilizers are preferably packed in PP sacks.
Another important segment for Raffia is the Packaging of Food Grains, Sugar and Agricultural Produce . This sector is presently coming under the Jute Packaging (Mandatory) Act of 1987 (JPMA) and has seen relatively higher growth in last decade, solely due to the end-use advantages of PP/ HDPE woven sacks, easy availability, lower cost versus jute sacks. This Raffia packaging segment consumes around 229 KT of polymer with 14% share. India is one of the largest producers of commodities like food grains, sugar, fruits, vegetables and Tea. With varied crop pattern, localized production of commodities, safe and hygienic storage, transportation and distribution and protection against wastage, packaging becomes of utmost importance. Huge losses have been observed in agriculture produce in India. Wastage varies from 5% to 35% depending on nature of crops.
Open mesh leno sacks are widely used for packing of various agricultural products such as onions, potato, garlic, carrot, ginger, orange, pineapple, other fruits and vegetables. Leno bags being permeable allow the air to pass through the sack which help to keep the product fresh. With their low weights and cost-effective nature, leno bags provide a superior packaging alternative to other materials.
Flexible Intermediate Bulk Containers (FIBCs) is another important segment of Raffia sector and consumes around 420 KT of polymer with 21% share. FIBCs, also called Big Bags, are the large size, box shape bags fabricated from thick and UV Stabilized, coated or uncoated Raffia fabrics, with integrated lifting devices for bag handling. FIBCs are one of the most cost effective and ideal types of packaging for shipping and storing dry bulk products. FIBCs are available for powdered and granular material like chemicals, petrochemicals, minerals, building materials, fertilizers, food grains, etc. India is the largest exporter of FIBCs o the global market, with major supplies to North America, Europe and Australia. In 1998, India’s export was around 8% of the global FIBC consumption of 567 KTA. The domestic FIBC industry has recorded an admirable growth in the last two decades and the present export share is around 30% of the global FIBC consumption of 1240 KTA. The major factors contributing to this growth are the local availability of raw materials including speciality high tenacity grades, efficient machinery with latest technology, skilled manpower specially for the FIBC fabrication process, stringent quality norms and, the long reputation of supply of high quality FIBCs to the global market.
Polymer Packaging Sacks is yet another segment of domestic Raffia industry which is growing at fast pace and the present consumption of this segment is 82KT of PP resin. Recently, all domestic polymer producers have voluntarily started procurement of ISI marked, BIS (Bureau of Indian Standards) compliant packaging sacks to ensure high level of bag quality and consistent end-use performance.
Geosynthetics segment which includes geotextiles, geomembranes, and other geo-engineering products, is a relatively new entrant in Raffia industry. Polypropylene woven geotextiles of various types such as tape-by-tape, tape-by-multifilament yarn and tape-by-monofilament are extensively used for soil embankments and soil erosion control in construction of irrigation works, roads, railways, ports, mines, buildings and more. Having the functions of reinforcement, filtration, drainage and layer separation, PP woven geotextile is one of the most popular and fast-growing segments. Polypropylene is the predominantly used raw material for production of geotextiles and the present consumption is 35 KT. Geomembranes represent the other largest group of geosynthetics. Geomembranes are relatively thin, impervious sheets of PP or HDPE woven fabrics and multiple laminated on both sides, used primarily for waterproofing, separation and linings of liquids or solids storage facilities. This includes all types of landfills, surface impoundment, roads, railways, canals, reservoirs, pond lining in aquaculture and agriculture and other containment facilities. Geomembranes produced from Raffia fabrics provide higher strength, longer service life, most economical and effective method of storing water. Although this segment is in nascent stage, in recent years it has shown rapid growth and popularity, particularly in pond lining sector.
Other growing applications of Raffia are packaging sacks for animal feed, fodder, chemicals, sand, minerals, flour, seeds, nuts, and many more products of mass consumption. Raffia tape yarns also find there use in wrapping fabrics, tarpaulins, raschel knit shade net fabrics, webbings, lifting slings, ropes, twines, stitching threads, etc.