Consumption of PVC products in India will double to 3m t/y within the next five years according to a new report from the German Office for Foreign Trade (bfai, Cologne / Germany; www.bfai.de). In line with other regions with underdeveloped infrastructures, the country’s booming construction industry is driving demand for pipes, window frames and floor coverings. At the same time, producers of PVC film and bottles are benefiting from sustained growth in the packaging industry, according to bfai.

General boom in demand for plastics in India

The PVC boom reflects generally high demand for plastics in the country. Imports of plastics have increased 14% in India and the subcontinent is already the world's eighth largest producer of polymers and plastic components. Nevertheless, per capita consumption is just 5 kg, well below the international average of 24 kg. However, growth rates are high and domestic consumption is expected to double to 10 kg per person by 2010.

With demand expected to rise to 12.5m t/y in the near future, India looks set to become the world’s third largest consumer of plastics after the US and China. Demand is expected to rise to 100m t/y by 2030, placing India on a par with China. Sector sales were USD 14.4 bn in the 2007/08 financial year, ending 31 March. According to a forecast by the Organisation of Plastic Processors of India (OPPI, Mumbai / India; www.oppindia.org), sales could rise by 12-14% a year in real terms up to 2012.

Water is the key infrastructure issue: focus on PVC pipes

According to bfai, sector insiders anticipate that consumption of PVC products will increase from nearly 1.5m t/y at present to 3m t/y by 2012/13. Construction activity is currently rising by 10-12% annually and the Indian government plans to invest around USD 500 bn in infrastructure improvements in the next five years, including the construction of housing and the supply of drinking water.

As a result, demand for PVC pipes alone should rise from the present level of 1.1m t/y to 2.5m t/y by 2013 according to the trade journal “Industrial Research”. Investment in agricultural irrigation in addition to growing demands in construction means that around three-quarters of total Indian demand for PVC will be for pipes.

Floor coverings, windows and packaging are still niche markets

Demand for PVC floor coverings is being driven by commercial construction and is expected to rise from 103,000 t/y to 126,000 t/y in the next five years. In contrast, wood and aluminium window frames remain the most widespread. bfai predicts that demand in this market could shift to PVC in the wake of rising energy costs. However, an increase from 75,000 t/y to 84,000 t/y by 2012 would be marginal by European, especially German, standards considering the potential size of the Indian market.

Volume sales of PVC film are being driven by continued growth of the packaging sector. The Indian Printing, Packaging and Allied Machinery Manufacturers Association (IPAMA, Noida / India; www.ipama.org) estimates that sales of PVC film were around USD 15 bn in 2006/07, with 75% going to the food and beverage sector. According to IPAMA, sector sales should grow by 20-30% annually in real terms up to 2012. The second major customer, the pharmaceutical industry, is also growing annually by an average of 15%, leading to rising demand for PVC film.

Significant increase in PVC production

In view of these trends, Indian PVC producers are planning to expand capacity substantially in the next few years. In 2007/08 total production capacity on the subcontinent was 985,000 t/y, an increase of some 20% compared with 2006/07. Capacity utilisation was around 94%. To meet rising demand without an increase in imports, annual capacity increases of at least 120,000 t will be required.

Accordingly, a number of PVC producers have announced expansion plans in recent months. One of the biggest is a second production facility at Chemplast Sanmar (Chennai / India; www.sanmargroup.com), with capacity of 170,000 t/y in Cuddalore in the state of Tammil Nadu. The country’s leading producer Reliance Industries (RIL, Mumbai / India; www.ril.com) has also announced plans to raise capacity at its headquarters from 625,000 t/y at present, but has not give details of any specific projects. In 2007 RIL took over its former competitor Indian Petrochemicals (IPCL) with capacity of 243,000 t/y.

Other suppliers are Finolex (Pune / India; www.finolex.com) with output of 260,000 t/y, DCW (Mumbai / India; www.dcwltd.com) with capacity of 90,000 t/y and DCM Shriram (New Delhi / India; www.dcmsr.com) which mainly specialises in fibres but also produces 70,000 t/y PVC. Like almost 60% of the Indian petrochemical industry, most of these companies are based in the states of Gujarat and Maharashtra in south-west India.