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Home , Commodity plastics, Molding (process), Plastics industry

2016

Indian Market Analysis

For more details, please contact, Fatima, Principal Advisor SAATRA Capital Advisory LLP [email protected] www.saatra.com

Market Analysis Table of Contents INTRODUCTION ...... 3 Preface ...... 3 Background ...... 4 PLASTIC INDUSTRY ...... 5 Overview ...... 5 History ...... 5 Raw Materials ...... 6 Characteristics of Plastics ...... 6 Type of Plastics ...... 7 Production Processes ...... 8 7 Major Plastics - Classification ...... 9 Plastics - Usage and Application ...... 19 INDIAN PLASTIC INDUSTRY ...... 20 Structural Drivers for Sustainable Growth of Plastic Industry...... 20 Evolving Plastics Scenario ...... 21 Achievements of Indian Plastic Processing Industry ...... 21 An Insight into the Indian Industry ...... 21 Trends in the Indian Plastic Processing Industry ...... 23 Downstream industry: Methods of plastic processing ...... 23 Plastics Market Analysis ...... 26 Market Size ...... 26 Import-Export Scenario ...... 27 Demand Supply Scenario ...... 28 Opportunity ...... 30 Trends and Outlook of the Plastics Market ...... 31 Market Growth Drivers ...... 31 Challenges in the Indian ...... 34 FUTURE PROSPECTS – INDIAN PLASTIC INDUSTRY ...... 36 Emerging Applications of Plastic ...... 36 Automotive ...... 36 Textile fibers ...... 36 Flexible packaging ...... 36 Light-weighting ...... 37 & Waste of Plastics ...... 38 Dynamics Driving Growth in the Indian Plastic Market ...... 40 Other Factors Driving the Indian Plastic Industry ...... 41 Indian Plastics - Vision 2020 ...... 41 Replacement Opportunity ...... 41 Short-term Opportunity ...... 41 Long term Opportunity ...... 42 Future of Plastics Market ...... 43 Indian Plastic Market 2020 ...... 43 India – Enormous Untapped Potential ...... 44 APPENDIX...... 46 Plastic Fact Sheet ...... 46 Plastic Bags ...... 47 History ...... 47

Market Analysis Production ...... 48 Manufacture and Composition ...... 48 Biodegradable Materials ...... 48 Types of Plastic Bags ...... 48 Environmental Concerns ...... 49 Opportunity ...... 49 Reduction, Reuse and Recycling ...... 49 Legislation ...... 50 Issues ...... 52 Ban or Tax or What? ...... 53 The Downfall of the : A Global Picture ...... 54 Quick Facts ...... 57 Campaign Against Plastic Bags ...... 58

Market Analysis INTRODUCTION Preface This report attempts to provide an overview of the Indian Plastic Processing Industry, its growth prospects, challenges faced and emerging applications of plastics in the market. it also highlights select strategic initiatives to bring about a rapid development of this industry.

The Indian Plastic Industry gained momentum in early 1990's when the economy opened up with liberal industrial policies. Further impetus was added with investments in production from mid-1990's onwards. This further fuelled investments in plastic processing industry as well as downstream machinery sector.

In the last decade, a number of emerging applications of plastics have been developed in many industries for e.g. in Automotive, Packaging, , Textile etc. which have changed the day to day lives of the people. The industry has produced better and improved quality of plastics with the help of new especially in the packaging industry leading to replacement of several materials such as wood, metals, glass etc.

Currently, in India, there is a greater presence of plastics in the packaging industry with 43% penetration as compared to a world average of 35%. On the other hand, the agricultural sector has the least penetration at 2% as compared to world average of 8%. This indicates that the Indian agriculture industry can be a strong host to the plastic industry for future growth.

However, Indian Plastic industry faces issues like environmental concerns, lack of technology, and vulnerability to fluctuating feed stock prices. Going ahead recycling & reuse of plastics could be a foremost step towards fostering and sustainability.

With the current government's Make in India campaign, the plastics processing industry can be benefitted by presence of global businesses in this domain. There is tremendous scope for growth of this sector in the years to come.

Market Analysis Background Plastics have revolutionized our lives, creeping into every nook and corner of our homes and offices. However, India’s per capita consumption of plastics is still 13 kg compared to 100 kg in developed countries and a world average of 27 kg. Consumer plastics mainly comprise such as , high and low density , and . Broadly plastics can be classified into two types namely Thermosetting and . The type of plastics includes HDPE, LDPE, PVC, PP, PS, PETE and vinyl plastics, to name a few.

The plastics industry is highly fragmented. There are more than 40,000 plastic processing units, of which three-fourth are in the small-scale sector, which also accounts for a quarter of the total polymer consumption. About 30 per cent of the total polymer consumption accounts for recycled plastic. Plastics have a high volume –to-weight ratio, which makes their collection and a major cost factor.

The Indian plastics industry has been growing at a phenomenal rate of 11 per cent over the years. Thus its potential is being utilized properly. The boost in the plastics industry is due to the rapid growth of segments like , packaging, healthcare, consumer durables and telecommunication sectors. Annually around six million tons of plastic is produced in the country, with the plastic packaging sector growing fastest.

Reliance Industries Ltd., Gas Authority of India and are major producers of polymers in India. RIL, Asia’s largest manufacturer of polypropylene with a combined capacity of over one million tons, holds 70 per cent market share.

India is the third largest plastics consumer after the US and China at over 30 million tons in 2015. Plastic consumption is expected to double in the next three years. It is projected that India’s market for finished plastic goods will reach $350 billion by 2017, while exports are expected to reach a level of $200 billion in the same period. India ranks highest in recycling of plastics with 60 per cent of plastic recycled compared with a world average of 20 per cent. Experts have estimated that the basic demand for plastic would be boosted over the next years by the housing, automobile and sectors.

Market Analysis PLASTIC INDUSTRY Plastics Overview A plastic is a type of synthetic or man-made polymer; similar in many ways to natural resins found in trees and other plants. Webster's Dictionary defines polymers as: any of various complex organic compounds produced by polymerization, capable of being molded, extruded, cast into various shapes and films, or drawn into filaments and then used as textile fibers.

History The history of manufactured plastics goes back more than 100 years; however, when compared to other materials, plastics are relatively modern. Their usage over the past century has enabled society to make huge technological advances. Although plastics are thought of as a modern invention, there have always been "natural polymers" such as amber, tortoise shells and animal horns. These materials behaved very much like today's manufactured plastics and were often used similar to the way manufactured plastics are currently applied. For example, before the sixteenth century, animal horns, which become transparent and pale yellow when heated, were sometimes used to replace glass.

Alexander Parkes unveiled the first man-made plastic at the 1862 Great International Exhibition in London. This material—which was dubbed Parkesine, now called celluloid—was an organic material derived from cellulose that once heated could be molded but retained its shape when cooled. Parkes claimed that this new material could do anything that rubber was capable of, yet at a lower price. He had discovered a material that could be transparent as well as carved into thousands of different shapes.

In 1907, chemist Leo Hendrik Baekland, while striving to produce a synthetic varnish, stumbled upon the formula for a new synthetic polymer originating from . He subsequently named the new substance "Bakelite." Bakelite, once formed, could not be melted. Because of its properties as an electrical insulator, Bakelite was used in the production of high-tech objects including cameras and telephones. It was also used in the production of ashtrays and as a substitute for jade, and amber. By 1909, Baekland had coined "plastics" as the term to describe this completely new category of materials.

The first patent for (PVC), a substance now used widely in vinyl siding and water pipes, was registered in 1914. Cellophane was also discovered during this period.

Plastics did not really take off until after the First World War, with the use of petroleum, a substance easier to process than coal into raw materials. Plastics served as substitutes for wood, glass and metal during the hardship times of World War’s I & II. After World War II, newer plastics, such as , , silicones, polypropylene, and joined polymethyl methacrylate and and PVC in widespread applications. Many more would follow and by the 1960s, plastics were within everyone's reach due to their inexpensive cost. Plastics had thus come to be considered 'common'—a symbol of the consumer society.

Since the 1970s, we have witnessed the advent of 'high-tech' plastics used in demanding fields

Market Analysis such as health and technology. New types and forms of plastics with new or improved performance characteristics continue to be developed.

From daily tasks to our most unusual needs, plastics have increasingly provided the performance characteristics that fulfill consumer needs at all levels. Plastics are used in such a wide range of applications because they are uniquely capable of offering many different properties that offer consumer benefits unsurpassed by other materials. They are also unique in that their properties may be customized for each individual end use application.

Raw Materials Oil and are the major raw materials used to manufacture plastics. The plastics production process often begins by treating components of crude oil or natural gas in a "cracking process." This process results in the conversion of these components into hydrocarbon such as ethylene and propylene. Further processing leads to a wider range of monomers such as , vinyl chloride, , terephthalic acid and many others. These monomers are then chemically bonded into chains called polymers. The different combinations of monomers yield plastics with a wide range of properties and characteristics.

Many common plastics are made from hydrocarbon monomers. These plastics are made by linking many monomers together into long chains to form a polymer backbone. Polyethylene, polypropylene and polystyrene are the most common examples of these. Below is a diagram of polyethylene, the simplest plastic structure.

Even though the basic makeup of many plastics is carbon and hydrogen, other elements can also be involved. Oxygen, chlorine, fluorine and nitrogen are also found in the molecular makeup of many plastics. Polyvinyl chloride (PVC) contains chlorine. contains nitrogen. Teflon contains fluorine. Polyester and contain oxygen.

Characteristics of Plastics Plastics are divided into two distinct groups: and thermosets. The majority of plastics are thermoplastic, meaning that once the plastic is formed it can be heated and reformed repeatedly. Celluloid is a thermoplastic. This property allows for easy processing and facilitates recycling. The other group, the thermosets, cannot be re-melted. Once these plastics are formed, reheating will cause the material to decompose rather than melt. Bakelite, poly phenol formaldehyde, is a thermoset.

Each plastic has very distinct characteristics, but most plastics have the following general attributes.  Plastics can be very resistant to chemicals.  Plastics can be both thermal and electrical insulators.  Generally, plastics are very light in weight with varying degrees of strength.

Market Analysis  Plastics can be processed in various ways to produce thin fibers or very intricate parts.  Polymers are materials with a seemingly limitless range of characteristics and colors.  Polymers have many inherent properties that can be further enhanced by a wide range of additives to broaden their uses and applications.  Polymers are usually made of petroleum, but not always. Many polymers are made of repeat units derived from natural gas or coal or crude oil. But block repeat units can sometimes be made from renewable materials such as from corn or cellulosics from cotton linters.

General Properties of Plastics

 Plastics are synthetic polymers of high molecular weight.  They are sensitive to heat, and many may melt or soften at or below 1000C. Nevertheless, several plastics can be autoclaved e.g. nylon, polycarbonate, polypropylene, high density polyethylene (HDPE) etc.  Plastic are light in weight; they are easier to handle.  Mechanically they are almost as strong as metals and, therefore, containers can have thinner walls than glass containers.  They are poor conductors of heat, a disadvantage if the content is to be autoclaved.  Generally, they are resistant to inorganic chemicals but are often attacked by organic chemicals but are often attacked by organic solvents and oils.  Plastic contain some additives (e.g. antioxidants, lubricants, , stabilizers, ) which may contaminate the content.  Very few types of plastics completely prevent the entry of water vapor and some are permeable to gases like oxygen, carbon dioxide.

Type of Plastics The plastics industry comprises thermoplastics (covers 70% of plastic market) and thermosets. Thermoplastics are generally defined as plastics which soften when heated. Thermosets in contrast are completely infusible and are generally made from two reactive components which harden or “cure” during the reaction. The thermoset resins market is approximately one third of the size of the thermoplastics market. The thermoplastics industry is divided broadly into (1) (2) plastics while Thermoset materials include unsaturated (UP) and phenol-formaldehyde (PF), which is used in end use markets, include plywood , /bedding, building & , automotive, consumer products and electronics.

PLASTICS Thermosetting Resins Phenolic Urea Thermoplastic Resins Polyethylene Polypropylene Polyvinylchloride (PVC) Polystyrene

Market Analysis Polycarbonate (Nylon) Acrylic Multipolymers

Commodity Plastic are generally characterized by low price and properties not suitable for durable, demanding applications without the use of additives, reinforcing fillers, fibers or polymer blends. It is used in high volume and wide range of applications, such as film for packaging, photographic and magnetic tape, clothing, beverage and trash containers and a variety of household products where mechanical properties and environments are not critical. Such plastics exhibit relatively low mechanical properties and are of low cost. It comprising of Polyethylene (PE), Polypropylene (PP), Polyvinyl Chloride (PVC) and Polystyrene account for bulk of the plastic consumption in India. Commodity plastics are used for consumer goods (i.e. food storage), are more readily available and generally have lower mechanical properties. 80%-85% of all thermoplastics are commodity, balance is engineered.

Engineering Plastic Engineering plastics are much more robust in their properties and more expensive. Typically, they are used in niche and demanding applications in contrast to the large volume single-use markets occupied by commodity plastics. The product has a significant potential and offer tremendous opportunities on account of wide range of applications in different sectors. It comprises of Acrylonitrile butadiene styrene (ABS), Polyethylene terephthalate (PET), polycarbonates (PC) and a range of or . Engineered plastics used for durable goods, have better mechanical properties or “special” property.

Production Processes Plastics are polymers which are prepared from monomers. Plastics may be used directly to form the finished article, it is usual to add other substances for improved stability, or in-use performance. Additives of Plastics . Stabilizer: Side reactions during polymerization may produce a proportion of unsaturated potentially unstable compounds. so stabilizers are used to stop those side reactions. e.g. octyl tin to stabilize PVC. . Antioxidants: Plastics are vulnerable to oxidation. The antioxidant binds with the free radicals and stops the oxidation reaction. e.g. N,N’-di-napthyl-p-phenylene diamine for stabilizing plastics and rubbers. . : These are used for decorative purpose. They may absorb electro-magnetic radiation in UV region and thereby reducing photo-degradation. For clear plastics organic absorbers such as 4-biphenyl salicylate are used. . Fillers are often employed to make the product cheap but in some cases may be essential for correct product performance. e.g. Bakelite, a phenol-formaldehyde resin, is brown brittle material, quite unsuitable for the manufacture of screw caps unless mixed with a filler such as wood . Examples of fillers: whiting, asbestos and . . Plasticizers are used to reduce transition temperatures of a polymer. They do it by directly reducing the attractive forces between polymer chains. . Other agents: Cross-linked agents, curing agents, activators and accelerators etc.

Market Analysis Processing Methods There are several different processing methods used to make plastic products. Below are the four main methods in which plastics are processed to form the products that consumers use, such as , , bags and other containers. . —Plastic pellets or granules are first loaded into a hopper, then fed into an extruder, which is a long heated chamber, through which it is moved by the action of a continuously revolving screw. The plastic is melted by a combination of heat from the mechanical done and by the hot sidewall metal. At the end of the extruder, the molten plastic is forced out through a small opening or to shape the finished product. As the plastic product extrudes from the die, it is cooled by air or water. Plastic films and bags are made by extrusion processing. . Injection Molding—Injection molding, plastic pellets or granules are fed from a hopper into a heating chamber. An extrusion screw pushes the plastic through the heating chamber, where the material is softened into a fluid state. Again, mechanical work and hot sidewalls melt the plastic. At the end of this chamber, the resin is forced at high pressure into a cooled, closed mold. Once the plastic cools to a solid state, the mold opens and the finished part is ejected. This process is used to make products such as butter tubs, yogurt containers, closures and fittings. . —Blow molding is a process used in conjunction with extrusion or injection molding. In one form, extrusion blow molding, the die forms a continuous semi-molten of thermoplastic material. A chilled mold is clamped around the tube and compressed air is then blown into the tube to conform the tube to the interior of the mold and to solidify the stretched tube. Overall, the goal is to produce a uniform melt, form it into a tube with the desired cross section and blow it into the exact shape of the product. This process is used to manufacture hollow plastic products and its principal advantage is its ability to produce hollow shapes without having to join two or more separately injection molded parts. This method is used to make items such as commercial drums and milk bottles. Another blow molding technique is to injection mold an intermediate shape called a preform and then to heat the preform and blow the heat-softened plastic into the final shape in a chilled mold. This is the process to make carbonated bottles. . —Rotational molding consists of a closed mold mounted on a machine capable of rotation on two axes simultaneously. Plastic granules are placed in the mold, which is then heated in an oven to melt the plastic Rotation around both axes distribute the molten plastic into a uniform on the inside of the mold until the part is set by cooling. This process is used to make hollow products, for example large toys or kayaks.

7 Major Plastics - Classification Plastic is an essential component of numerous consumer products, including water bottles and product containers. However, not every kind of plastic is the same. In 1988, the Society of the Plastics Industry (SPI) established a classification system to help consumers and recyclers properly recycle and dispose of each different type based on its chemical makeup. Today, manufacturers follow a coding system and place a number, or SPI code, on each plastic product, usually molded into the bottom. The following provides a basic outline of the different plastic types associated with each code number.

Market Analysis

Polyethylene terephthalate (PET or PETE or polyester)  Overview Plastic marked with an SPI code of 1 is made with polyethylene terephthalate, which is also known as PETE or PET. PETE-based containers sometimes absorb odors and flavors from foods and drinks that are stored inside of them. Items made from this plastic are commonly recycled. Usually clear in color, this plastic is considered generally safe and is picked up by most curbside recycling programs. However, the porous nature of its surface allows bacteria and flavor to accumulate, so avoid reusing these bottles as makeshift containers. PETE plastic is used to make many common household items like beverage bottles, medicine , peanut butter jars, combs, bean bags, and . Recycled PETE is used to make tote bags, , fiberfill material in winter clothing, and more.

 Description PET is the most well known member of the polyester family of plastic polymers. It initially gained widespread use as a wrinkle-free fiber (commonly called "polyester"), and the majority of its production still goes toward textile . It has become extremely popular for food and drink packaging purposes because of its strong ability to create a liquid and gas barrier - so oxygen cannot get in to spoil food, and the carbon dioxide that makes drinks fizzy cannot get out.

 Properties - clarity, lightness, strength, toughness, barrier to liquid and gas.

 Typical Use . Bottles (water, soft drink, juice, , wine, mouthwash, salad dressing), jars, oven-ready and microwaveable meal trays, detergent and cleaner containers. Also used in liquid crystal displays, film for capacitors, insulation for wire and insulating tapes, and as a common finish for wood products such as guitars, pianos and /yacht interiors. . PET fabric (polyester) is commonly used in textiles (fabric and clothing), padding and insulation (for pillows, comforters, upholstery), carpet, and moldings. Also for tyre reinforcements, conveyor belts, safety belts, coated fabrics and tarpaulins.

 Toxicity . PET may leach antimony (antimony trioxide is used as a catalyst and flame retardant in PET). The longer a liquid is left in a PET the greater the potential for release. As well, warm temperatures inside cars, garages, and enclosed storage areas increase the release of antimony into the liquid. Antimony trioxide is considered a possible . Workers exposed to antimony trioxide for long periods of time have exhibited respiratory and skin irritation and among female workers, increased incidence of menstrual problems and miscarriage -- while there is no evidence that these effects could

Market Analysis arise from exposure to the small amounts of antimony released from PET products (such as water bottles), it is preferred not to be exposed to it at all. . Evidence is also emerging that endocrine disruptors also leach from PET. . PET as a textile - i.e., polyester - likely contains flame retardants incorporated into it during the manufacturing process. As such, polyester is often described as "inherently flame retardant", but it is unclear exactly which flame retardant chemicals are added to polyester as it is being made, and thus it is difficult to know if there is a toxicity issue with polyester fiber.

 Recycling - About 29%. Recycled material down-cycled into polyester fiber for fleece clothing, tote bags, . "Down-cycling" means that the recycled material is of lower quality than the original PET, and can only be made into progressively lower quality products until it can no longer be recycled and becomes waste which is most likely landfilled.

 Usage – Health Hazard - Many consider PET a relatively safe single use plastic, but given the research indicating it can release antimony and , and our precautionary approach, we suggest avoiding it whenever possible. If one must use it, keep it away from heat and do not reuse it.

High density polyethylene (HDPE)  Overview The SPI code of 2 identifies plastic made with high-density polyethylene, or HDPE. HDPE products are very safe and are not known to leach any chemicals into foods or drinks. HDPE products are commonly recycled. Usually opaque in color and picked up by most recycling programs. This plastic is considered safe and has low risk of leaching. Items made from this plastic include containers for milk, motor oil, shampoos and conditioners, bottles, detergents, and bleaches. Many personalized toys are made from this plastic as well. Recycled HDPE is used to make plastic , plastic , fencing, and more.

 Description are the most widely used family of plastics in the world. The versatile polyethylene polymer has the simplest basic chemical structure of any plastic polymer (repeating units of CH2: one carbon and two hydrogen molecules) making it very easy to process and thus extremely popular for numerous low value applications - especially packaging. HDPE has long virtually unbranched polymer chains which align and pack easily

Market Analysis making it dense and very crystalline (structurally ordered) and thus a stronger, thicker form of of polyethylene.

 Properties - stiffness, strength, toughness, resistance to moisture, permeability to gas, ease of processing.

 Typical Use Plastic bags (grocery), opaque milk, water, and juice containers, bleach, detergent and shampoo bottles, garbage bags, dishes, yogurt and margarine tubs, liners, some medicine bottles. Also used in insulation, PEX piping, plastic/wood composites.

 Toxicity Being relatively stable, it is generally considered a safer plastic for food and drink use, although some studies have shown that it can leach the nonylphenol (added to HDPE as a stabilizer), especially when exposed to ultraviolet light - i.e., sunlight - and possibly other additive chemicals with estrogen-mimicking activity.

 Recycling - About 29%. Recycled material made into bottles for non-food items like shampoo, laundry detergent, motor oil; plastic lumber and furniture, piping, recycling bins, fencing, floor , buckets, crates, flower pots, garden edging, film and sheeting.

 Usage – Health Hazard - Relatively safe. But has been shown to release endocrine disrupting chemicals.

Polyvinyl chloride (V or Vinyl or PVC)  Overview Plastic labeled with an SPI code of 3 is made with polyvinyl chloride, or PVC. PVC is not often recycled and can be harmful if ingested. PVC is used for all kinds of pipes and tiles, but it's most commonly found in pipes. PVC, although tough in terms of strength, it is not considered safe to cook food near it. PVC contains softening chemicals called phthalates that interfere with hormonal development This kind of plastic should not come in contact with food items. This plastic is rarely accepted by recycling programs. Recycled PVC is used to make flooring, mobile home skirting, and other industrial-grade items.

 Description The second most widely used plastic resin in the world (after polyethylene), PVC (or vinyl) use has decreased because of serious health and environmental issues associated with its manufacture, use and disposal -- it's whole life cycle is toxic. But it is still popular and in common use because of its cost-effective versatility. The base is vinyl chloride - the presence of chlorine is the cause of many of PVC's problems - which can be combined and blended with numerous chemicals (including plasticizers such as phthalates) to create resins

Market Analysis with properties ranging from rigid to filmy to soft to leathery.

 Properties - versatility, ease of blending, strength, toughness, clarity, transparency.

 Typical Use Soft PVC (softened with plasticizers) used in toys, clear food (e.g., take-out) and non- (e.g., blister wrap, cling wrap), squeeze bottles, shampoo bottles, mouthwash bottles, cooking oil and peanut butter jars, detergent and window cleaner bottles, loose-leaf binders, shower curtains, blood bags and medical tubing, "pleather" clothing, wire and cable insulation, carpet backing and flooring. Rigid PVC used for blister packs and packaging, cards, piping (e.g., for plumbing), vinyl siding, window frames, fencing, decking, and other construction materials.

 Toxicity PVC is widely considered the most toxic and hazardous plastic that is still commonly used to make numerous consumer products. It may contain and/or leach a variety of toxic chemicals including, but not limited to: (BPA), phthalates, lead, dioxins, mercury, and cadmium. . The vinyl chloride monomer from which PVC is made is a known carcinogen, thus putting manufacturing workers and surrounding communities at risk. . Soft forms of PVC, such as toys and packaging and bottles, may leach phthalates. For example, di(2-ethylhexyl) phthalate (DEHP) and butyl benzyl phthalate (BBzP) are two phthalates commonly used as plasticizers or softening agents (usually DEHP). DEHP and BBzP are endocrine disruptors mimicking the female hormone estrogen and have been strongly linked to asthma and allergic symptoms in children living in homes where PVC dust was present and to ADHD in children; may cause certain types of cancer, including breast cancer. Recent consumer product legislation in Europe, Canada and the US, bans DEHP and BBzP and other dangerous phthalates from use in children's products in concentrations greater than 0.1%. . When PVC is burned (e.g., via waste incineration, car or home fires), dioxins are formed. Dioxins are known human and persistent organic pollutants, and are considered one of the most toxic types of chemicals ever tested.

 Recycling Rate - Very low. Rarely recycled because it is difficult to do so on an industrial scale. It should not be recycled because it contaminates the recycling stream. Recycled PVC can become packaging, binders, decking, paneling, insulation, mud flaps, film and sheet, flooring, garden hoses.

 Usage - Health Hazard - Can be extremely toxic.

Market Analysis

Low density polyethylene (LDPE)  Overview Plastic marked with an SPI code of 4 is made with low-density polyethylene, or LDPE. LDPE is not commonly recycled, but it is recyclable in certain areas. It tends to be both durable and flexible. It also is not known to release harmful chemicals into objects in contact with it, making it a safe choice for food storage. Plastic cling wrap, sandwich bags, squeezable bottles, and plastic grocery bags all are made from LDPE. Recycled LDPE is used to make garbage cans, lumber, furniture, and many other products seen in and around the house.

 Description Polyethylene is the most widely used family of plastics in the world. The versatile polyethylene polymer has the simplest basic chemical structure of any plastic polymer (repeating units of CH2: one carbon and two hydrogen molecules) making it very easy to process and thus extremely popular for numerous low value applications - especially packaging. LDPE polymers have significant chain branching including long side chains making it less dense and less crystalline (structurally ordered) and thus a generally thinner more flexible form of of polyethylene.

 Properties - strength, toughness, flexibility, resistance to moisture, ease of sealing, ease of processing.

 Typical Use Mostly for film applications like bags (grocery, dry cleaning, bread, frozen food bags, newspapers, garbage), plastic wraps; for milk and hot & cold beverage cups; some squeezable bottles (honey, mustard), food storage containers, container . Also used for wire and cable covering.

 Toxicity Being relatively stable, it is generally considered a safer plastic for food and drink use, although some studies have shown that it can leach the endocrine disruptor nonylphenol (added to LDPE as a stabilizer), especially when exposed to ultraviolet light - i.e., sunlight - and possibly other additive chemicals with estrogen-mimicking activity.

 Recycling Rate - Low. Difficult to recycle. Recycled material can be made into compost bins, paneling, plastic lumber.

 Usage - Health Hazard - Relatively safe. But has been shown to release endocrine disrupting chemicals.

Market Analysis

Polypropylene (PP)  Overview Consumers will find the SPI code of 5 on plastic items made with polypropylene, or PP. PP can be recycled but is not accepted for recycling as commonly as PETE or HDPE. This type of plastic is strong and can usually withstand higher temperatures. Among many other products, it is used to make plastic diapers, Tupperware, margarine containers, yogurt , syrup bottles, prescription bottles, and some stadium cups. Plastic caps often are made from PP as well. Recycled PP is used to make ice scrapers, rakes, battery cables, and similar items that need to be durable. This plastic is also considered safe, and is increasingly being accepted by curbside recycling programs.

 Description Polypropylene is used for similar applications as polyethylene, but is generally stiffer and more heat resistant - so is often used for containers filled with hot food. It too has a simple chemical structure (many methyl groups of CH3 - one carbon and three hydrogen molecules) making it very versatile. It's crystallinity (structural order affecting hardness & density) is quite high, somewhere between LDPE and HDPE.

 Properties - strength, toughness, resistance to heat, chemicals, grease & oil, barrier to moisture.

 Typical Use Food containers (ketchup, yogurt, cottage cheese, margarine, syrup, take-out), medicine containers, straws, bottle caps, Britta filters, Rubbermaid and other opaque plastic containers, including baby bottles. Other uses include disposable diaper and sanitary pad liners, thermal vests, appliance parts and numerous car parts (bumpers, , fixtures).

 Toxicity Being relatively stable, it is generally considered a safer plastic for food and drink use, although it has been shown to leach plastic additives (such as the stabilizing agent oleamide) when PP labware was used in scientific experiments and one older study has suggested heated PP may be linked to occupational asthma based on the exposure of a worker in a PP factory.

Market Analysis

 Recycling Rate - Low, because often pigmented or mixed with other resins, therefore difficult to sort. Recycled material made into brooms, brushes, bins pallets, auto battery cases, flower pots.

 Usage - Health Hazard - Relatively safe. But has been shown to release additive chemicals when used as labware in scientific experiments.

Polystyrene (PS)  Overview Plastic marked with an SPI code of 6 is made with polystyrene, also known as PS and most commonly known as Styrofoam. PS can be recycled, but not efficiently; recycling it takes a lot of energy, which means that few places accept it. Overwhelming evidence suggests that this type of plastic leaches potentially toxic chemicals, especially when heated. It is difficult to recycle and most recycling programs won’t accept it. Disposable coffee cups, plastic food boxes, plastic , packing foam, and packing peanuts are made from PS. Recycled PS is used to make many different kinds of products, including insulation, license plate frames, and rulers.

 Description Polystyrene is commonly associated with the trade name Styrofoam food containers and packing peanuts made of expanded PS (EPS), which is essentially foamed PS that has been puffed up with air. PS synthesis requires benzene, a known carcinogen, to form the monomer styrene, which is reasonably anticipated to be a human carcinogen. Apart from low cost, low strength foam, PS can be made as a clear, glassy, hard polymer used for things like cutlery and cd cases; also higher impact versions exist for harder applications.

 Properties - versatility, clarity, easily formed.

 Typical Use EPS: Styrofoam food containers, egg cartons, disposable cups and bowls, take-out food containers, deli food plates, packaging, packing peanuts, bike helmets. Harder clear/opaque PS: disposable cutlery & razors, compact disc &DVD cases. High impact PS: hangers, smoke detector housing, license plate frames, medicine bottles, test tubes, petri dishes, model assembly kits.

 Toxicity PS food containers can leach styrene, which is reasonably anticipated to be a human

Market Analysis carcinogen and is considered a brain and nervous system toxicant. Animal studies have shown adverse effects on genes, lungs, liver, and the immune system. Note that styrene is also present in second-hand cigarette smoke, off-gassing building materials, and car exhaust. The leaching of styrene from PS containers into food is increased when the food or liquid is hot and oily.

 Recycling Rate - Very low, because difficult to recycle. Recycled material made into packaging and thermal insulation.

 Usage - Health Hazard – Can leach styrene, which is a brain and nervous system toxin and likely carcinogenic.

This category does not identify one particular plastic resin. It is a general catch-all for all plastics other than those identified by numbers 1-7, and can include plastics that may be layered or a mixture of various plastics. It includes the new .

Polycarbonate (PC) is an extremely common plastic in this category and is often associated with this category (sometimes a product will have the number 7 on it with the letters "PC" underneath), also, polycarbonate is not the only plastic in this category and if a product has a number 7 on it without the letters PC under it, the product could be made of polycarbonate or it could be any other plastic.

Polycarbonate  Overview The SPI code of 7 is used to designate miscellaneous types of plastic that are not defined by the other six codes. Polycarbonate and polylactide are included in this category. These types of plastics are difficult to recycle. Polycarbonate, or PC, is used in baby bottles, large water bottles (multiple-gallon capacity), compact discs, and medical storage containers. Recycled plastics in this category are used to make plastic lumber, among other products. It is wise to dispose of any food or drink related product that is known to contain BPA. It is difficult to recycle and most curbside recycling programs won’t accept it.

 Description Polycarbonate use as a consumer plastic has decreased drastically in recent years due to the health-related problems associated with bisphenol A (BPA), the primary molecule in PC polymers, as well as increasing national bans on its use for certain products such a baby

Market Analysis bottles and infant formula packaging. It is a tough family of engineering plastics originally developed to be an alternative to die-cast metal. It's strength and transparency made it a popular choice for consumer products needing to be shatter-proof, and also for epoxy resins. PC is also known by various trade names including Lexan, Makrolon and Makroclear.

 Properties - Easily molded, temperature resistance, stiffness, strength, optical clarity.

 Typical Use Baby bottles, sippy cups, water bottles, three and five-gallon large water storage containers, metal food can liners, juice and ketchup containers, oven-baking bags, carbonless paper receipts. Also used in custom packaging, eye glass lenses, epoxy resins, dental , compact discs, DVDs, Blu-ray discs, lab equipment, gears, snowboards, car parts, housing for cell phones, computers and power tools.

 Toxicity The problem with PC is bisphenol A (BPA), the synthetic backbone which readily breaks down and leaches from PC. For example, BPA leaching is a significant concern with PC epoxy-lined cans used for foods, especially oil-based and/or acidic foods, which will increase leaching. BPA is often described as a hormone or endocrine disruptor, because it mimics human hormones, in particular the estrogen hormones, which are involved in normal cellular function, reproduction, development and behavior. Peer-reviewed scientific studies have linked BPA to numerous health problems including chromosome damage in female ovaries, decreased sperm production in males, early onset of puberty, various behavioral changes, altered immune function, sex reversal in frogs, impaired brain and neurological functions, cardiovascular system damage, adult-onset (Type II) diabetes, obesity, resistance to chemotherapy, increased risk of breast cancer, prostate cancer, infertility, and metabolic disorders -- research into the impacts of BPA on human health is extensive and ongoing.

 Recycling Rate - Very low. Not all municipalities include polycarbonate as readily acceptable for their recycling programs. Recycled PC may be used to make plastic lumber.

 Usage - Health Hazard - Leaches bisphenol A (BPA), which is a known endocrine disruptor with numerous adverse health effects, including increased risk of cancers.

Market Analysis Plastics - Usage and Application

MATERIAL ADVANTAGES DISADVANTAGES TYPICAL USES High density Inert, low cost, low Semi-opaque, transfer Detergents, polyethylene (HDPE) water vapor of taste ingredients, bleaches, milk, transmission, tough. absorb dilute foods, cleansing solutions. powders, drugs & . Low density Squeeze property, Relatively poor barrier Cosmetics, personal polyethylene (LDPE) inertness, low cost. to non-polar molecules products, foods. and high water vapor transmission. Polystyrene Clarity, stiffness, low High water vapor Dry drugs, cost. transmission, . susceptibility to cracking, poor impact.

Rigid polyvinylchloride Clarity, stiffness, O2- 10-12 additives may be Shampoo, bath oil, (PVC) barrier, retention of present, difficult to detergent. non-polar molecules. process, susceptible to organic solvent. Polypropylene Inert, low cost. Low temperature Drugs, cosmetics, brittleness, high syrups, juices. concentration of stabilizer is present. Polyamide (Nylon6,10) Good barrier for non- High cost, water Foods, drugs, polar molecules, tough, absorption cosmetics, aerosols good O2-barrier, sterilizable. Polycarbonate Very tough, clear, Cost, susceptibility to Drugs, cosmetics. sterilizable solvent cracking, poor barrier for water and O2.

Acrylic polymers Clarity, good for oils Poor water vapor Drug cosmetics. (PMMA =Polymethyl transmission, poor methacrylate) barrier for O2.

Polyethylene Excellent strength, Bottle for terephthalate (PET) good barrier for gas carbonated waters, and aroma. waters, mouth washes, cosmetics.

Market Analysis INDIAN PLASTIC INDUSTRY Since independence, plastic industry in India has been playing a predominant role in shaping our lives. The plastic industry in India has made significant achievements since its beginning by commencing production of polystyrene in 1957. Since last decade with the advent of new and improved products, the industry has gained greater importance with the production of better and improved quality of plastic products.

Plastic industry in India symbolizes a promising industry and at the same time helps in creating employment opportunities for the people. Plastic industry caters to the entire spectrum of daily use items and covers almost every sphere of life such as clothing, housing, construction, furniture, automobiles, household items, agriculture, horticulture, irrigation, packaging, medical appliances, electronics and electrical etc.

The figure below represents the key plastic application sectors.

Plastics is one of the fastest growing industries in India (highly fragmented), has showcased phenomenal growth (11% CAGR) in the past decade as the scope of plastic application increased significantly across major sectors due to their multiple benefits. It has outpaced the GDP growth by 1.5x on an average on a long term basis while the growth has been double the pace during better times. The top 100 players account for just 20% of the industry turnover. The industry also consumes recycled plastic, constituting about 30% of total consumption. Despite being an industry dominated by unorganized players (70% of the industry size), the organized players outpaced them in terms of growth through constant innovation and regular introduction of niche products thereby gradually increasing market share. The current per capita plastic consumption of 13kg v/s world’s 27kg, is an indication of the massive growth potential, which would propel India’s plastics consumption to new levels.

Structural Drivers for Sustainable Growth of Plastic Industry The Indian plastic industry (piping & other products) is well poised to see secular growth story over the long run, given the manifold drivers such as

Market Analysis 1. Government thrust on improving water infrastructure through center & state sponsored programs under irrigation facilities and water linking projects 2. Increasing usage of plastic (v/s metals, wood products) across major sectors such as agriculture, construction sector, household/electronic appliances and automobiles 3. Low per capital consumption in large population base of India (10kg v/s world’s 27kg) 4. Strong replacement demand of plastic pipes over GI pipes 5. Infrastructure push – “Housing for all 2022, Toilets for all and development of 100 smart cities” 6. Lastly, GST rollout would bring cheers for the organized players.

Evolving Plastics Scenario Achievements of Indian Plastic Processing Industry  Growth of machinery industry – Installed capacity CAGR of 11% (2000/01 to 2013/14)  Global companies investing in India  One of the largest BOPP line in India  World’s largest integrated clean room FIBC manufacturing facility  World’s largest CD/DVD manufacturing facility  World headquarters for largest Lamitube manufacturer  Proposed Policies of government for growth of plastic industry o Technology Up-gradation Fund Scheme o Plastic Parks

An Insight into the Indian Polymer Industry  Polymer (plastic) Scenario & Trend in India As polymers have found uses in all spheres of life with demand for better materials, greater functional utility, more economical packaging and versatile and durable all-weather products, the gradual pick-up in investment cycle, consumer spending and increasing use of plastic for packaging in FMCG, Pharma products would drive the consumption of polymer to the tune of 20mn tons from 12.4mn tons in 2015-20E (to grow at a 10% CAGR).

Market Analysis  Major Polymer based Raw Material A variety of plastic raw materials are produced to meet the requirement of different sectors. The polymeric materials categorized as commodity, engineering and specialty plastics. Commodity plastics comprise of Polyethylene (PE), Polypropylene (PP), Polyvinyl Chloride (PVC) and Polystyrene while engineering exhibit superior mechanical and thermal properties, which includes styrene derivatives (PS/EPS & SAN/ABS), polycarbonate, Polymethyl methacrylate and polycarbonates etc. Major plastic materials like PE & PP are derived from ethylene and propylene respectively while other PVC, PS & Acrylonitrile Butadiene Styrene (ABS) and PC are produced from benzene, butadiene and other feedstocks.

India – Key Raw Material imports India is overall deficit in PE, PVC and engineering plastics, which are imported to cater the unmet domestic demand. The major import source countries are Saudi Arabia, Qatar, UAE, Korea, USA, Singapore, Thailand, Germany, Spain and Malaysia.

Market Analysis

 Polymer – User Industry Penetration India holds immense potential for use of plastic in Agriculture and Infrastructure. Packaging industry in India has seen a strong penetration of plastics as compared to global standards. However, agriculture sector hasn't yet explored the benefits of plastics to a large extent. Global average for plastics demand in agriculture is ~8% while India has substantially lower at only 2%.

Packaging industry in India has seen a strong penetration of plastics as compared to global standards. However, agriculture sector still hasn't explored the benefits of plastics to a large extent. Global average for plastics demand in agriculture is ~8% while India is substantially lower at only 2%.

Technology Trends in the Indian Plastic Processing Industry Downstream industry: Methods of plastic processing To manufacture finished products, polymers are processed through various types of techniques namely extrusion, injection molding, blow molding and roto-molding. Various products manufactured through these processes are highlighted in the following table

Market Analysis

Classification of Plastic products by type of Process

Extrusion process is the most commonly used process in India and accounts for ~64% of total consumption by downstream plastic processing industries. Injection molding is the other popular process accounting for ~25% of the consumption. Blow molding is used for ~ 5% while Roto-molding 1% while the rest of the plastic is processed through other processes.

Market Analysis

As shown in the above table, more than 33,000 new machines were installed in the domestic processing sector during the 2001-10. Consequently, processing capacity more than doubled from ~8.2mn tons in 2001-02 to ~19.2mn tons in 2009-10, adding additional capacity of ~11mn tons during the decade with investments of over Rs100 bn. The total no. of machines addition growth was nearly 7% CAGR during 2001-14 while the installed capacity and polymer consumption grew by 10% CAGR over the same period.

 2015 In 2015, the number of processing units was projected to be at 40,000, which in-turn has also increased the employment potential of the sector. The industry currently hires more than 4 Mn people, directly and indirectly. Additional 40,800 plastic processing machines were installed in the Indian plastic processing industry. 26,700 machines were added in the injection molding segment; 3,900 machines in the blow molding and 10,200 machines were added in the extrusion segment.

The Indian plastics industry has been growing at a rate of 12% over the years and with its true potential harnessed, it is all set to reach the 13 MMT by consumption making India the 3rd largest consumer of plastics. To match this figure, India would require 42,000 new machines and around US $10 bn of project investment by 2020.

Opportunity - The shortage of a skilled labor, the plastics industry is also facing the problem of a nationwide power deficit. The electricity demand deficit is 12-13 per cent. This provides excellent opportunities for firms offering energy saving solutions, power saving machines and ancillary equipment.

Market Analysis Plastics Market Analysis Global economic growth is generally interlinked to consumption where plastic is an important partner. Plastic processing is the pillar of economy in most of the advanced economies

Per capita consumption of plastic in the world is around 28 kgs whereas India is at 11 kgs, China is at 38 kgs and Brazil is at 32 kgs. India’s per capita consumption is one of the lowest in Asia. In countries such as USA, Germany, UK, Italy, Spain, Australia, Japan, Korea, Taiwan the per capita consumption is more than 100 kgs. This means that the Indian Plastic Industry has immense opportunity and a huge potential for growth.

Market Size Indian plastic industry is making significant contribution to the economic development and growth of various key sectors in the country which includes Automotive, Construction, Electronics, Healthcare, Textiles, and FMCG etc. Plastic industry in India creates new employment opportunities for the people hence proving to be a promising industry. The plastic processing industry has the potential to contribute in bringing foreign investments and contributing to India's dream of becoming a manufacturing hub.

India Per Capita Consumption of Virgin 11 kg & Recycled 3.8 kg

Virgin Polymer consumption in the year 2014-2015 - 14 MMT

No. of Converting / Organised sector - > 30,000 Processing units – Unorganized sector > 20,000

No of processing Machines - ~ 113,000

Processing Capacity - 30 MMT

CAGR - 13 % over the last 5 years

No. of Plastics Machinery Manufacturing units in India > 200

Investment in Machinery US$ 5 Billion

Investment required for next 5 years around 10 Billion US$ (Project Investments)

Size of Plastic & Polymer Industry –Rupees 1,44,000 Crores

Polymer Demand: ~24MMT by 2022/23

The players are : Reliance, Haldia, GAIL, IOCL, OPAL, ONGC, Finolex,

Indian Plastic Processing Industry Processing Indian Plastic SANMAR, Shriram, DCW, Mittal, Bharat Petroleum

Market Analysis Plastics processing industry has grown at a CAGR of 13% in volume terms from 6MnMT in FY'08 to 11MnMT in FY'13 and is expected to grow at a CAGR of 10% from FY '13 to FY '18 to reach 18 Million MT.

In value terms, the plastic processing industry has grown at a CAGR of 10% from INR 35,000 Cr. in FY '05 to INR 90,000 Cr. in FY '14. The industry turnover is expected to reach INR 1,37,000 Cr. by FY '18.

Import-Export Scenario

Indian scenario of Plastic Exports During 2014-15 Plastics Exports were around US$ 7.2 Billion, out of this:  Raw Material I.e. Polymer accounted for 38% i.e. US$ 2.74 Billion  Finished Plastics Products export accounted for US$ 4.46Billion

Market Analysis

Exports of value added plastic products (Bn USD)

Demand Supply Scenario India is overall deficit in plastics and a lot of these materials are imported to cater the unmet domestic demand. The major import source countries are Saudi Arabia, Qatar, UAE, Korea, USA, Singapore, Thailand, Germany, Spain and Malaysia.

India is deficit in PE, PVC and engineering plastics. In FY13, ~2.3 Mn TPA of PE was produced while domestics consumption was ~3.4 Mn TPA. In of PVC, the FY13 domestic demand stood at 2.1 Mn TPA and the domestic production was 1.2 Mn TPA. Polyamides consumption was 54,000 TPA, while domestic production was 13,000 TPA. Other major engineering plastics were imported.

Few Plastics materials are produced in surplus and these materials are exported to international markets. Major export destinations are China, Egypt, UAE, Turkey, Vietnam, and

Market Analysis Indonesia. In FY 13, Indian production of PP stood at 2.5 Mn TPA while demand was 2.1 Mn TPA only. Similarly, domestic demand for PS/EPS was 340,000 TPA, while production was 400,000 TPA.

India is deficit in PE is dependent on imports for fulfilling demand. In FY13, 1.2 MnT of PE was imported. PP production exceeds the domestic consumption and hence caters to international markets as well. India exported ~800,000 tons and imported ~450,000 tons of PP in FY13.

Domestic production of PVC is not enough to cater the demand and hence 30% of demand is met through imports. 1000,000 tons of PVC was imported in FY13. India is a net exporter of PS, while most of the engineering plastics are being imported.

Product-wise breakup of plastic product exports 2012-2013

Market Analysis Opportunity India offers a huge opportunity over long term for plastic product consumption (as there exists a low per capita consumption level of plastic products as compared to developed countries. As of FY '14, India's per capita consumption of plastic products is one- third of Brazil and approximately one-fifth of China. This indicates that going forward, there is significant scope for the consumption to rise keeping in mind India's current demographic situation.

Per capita plastic products consumption (kg/person)

Due to increasing domestic consumption and high potential, India is emerging as one of the focus destinations for plastics and downstream players worldwide. In FY '14, total number of processing units in the Indian plastic industry stood at approximately 30,000 which generated revenues of approximately INR 900 Bn.

Market Analysis Trends and Outlook of the Plastics Market  Plastics growth has slowed; it's dropped from 14 percent to something closer to 10 percent. The economy is on the downturn, in plastics there is slowdown, but the plastics industry has matured and the government has accepted by and large plastics as a material of choice.  India's plastics sector has been hit by the country's general economic troubles in the last two years, including the weakening rupee. However, underlying economic activity remains strong as use of plastic spreads to more sectors, opening new markets and replacing traditional materials. Previously in India plastics was limited only to household consumer durables and a little in packaging, but now it is accepted in infrastructure, in health care, in agriculture.  India's economy has slowed the last four years, with GDP growth of 3.2 percent in 2012 and 4.4 percent in 2013, down from 9-10 percent in several of the previous years. But it has looked up since recording around above 6 percent in 2015. In spite of some recent economic headwinds, India's plastics industry believes it's on track to more than double its polymer consumption by 2020, to 20 million metric tons. It is believed that fundamentals remain strong for the country's plastic sector, although growth has slipped.  Plastics consumption continues to grow about twice the rate of India's overall economy. Consumption of most polymers will grow at between 8-12 percent a year through 2020. That growth is coming off a very low base, however, with India using about 8 kilograms of plastic per capita, compared with more than 60 kg per person in developed economies like the United States.  Recent activity by non-governmental groups to try to ban PET in pharmaceutical packaging, has triggered the industry to do much more to address its environmental and image problems.

Market Growth Drivers A favorable cost benefit quotient and a versatile range of applications encourages the growth of plastics. The properties of these materials can be customized to meet specific demands by varying the chemical properties like molecular weight & side chain branching or by making copolymers and polymer blends.

Other major reasons for the plastic processing industry's growth are growth in the end use segments and higher penetration of plastics in various industry segments. The below figure illustrates major growth drivers for various industries-

Market Analysis

Market Analysis Industry Growth Drivers Applications Packaging . Food / Processed food . Multilayer films Retail revolution setting . FMCG items . BOPP Films pace for growth in . Packaged and fast food . Shrink & Stretch wraps packaging industry . Thin wall molding . Single serve packs/Power . packs . Blow molded containers . Shopping bags/Bags on rolls . Textiles and Toys Infrastructure . Building and construction . Pipes (gas, water supply, The 12th plan envisages . Public utilities services sewerage) investment of ~ $ 43 bn . Mega highway projects . Storage tanks for water management; . Rural electrification . Profiles $ 92 bn for irrigation projects . Geotextiles sector; $ 220 bn for . Mega irrigation projects power generation . 24 X 7 Water supply projects Agriculture . Advanced agricultural . Greenhouse films Bringing about the 2nd technology . Low green revolution . Government spending . Micro irrigation: Drip / . Retailers – farmers joint Sprinkler initiatives . Mulch films . channel / . Crates, Pallets Refrigerated storage Consumer Durables . Healthy economic growth . Appliances - Washing . Higher per capita income machines, Refrigerators, . Greater disposable TV’s, Mobile Phones, income Computers . Household – furniture & toys . Office, & Stadia . Furniture . Luggage . Houseware Healthcare . India as a medical . Heart valves, hearing aids, destination spectacles, prosthetics, etc. . Growing health . Packaging of medicines, awareness devices etc. . Disposable products : Syringes, IV sets, blood bags, diapers, bed covers, pillow covers, gowns, masks, gloves etc. Other Growth Areas – Rigid Packaging, Automotive, Industrial Components

Market Analysis

Challenges in the Indian Plastics Industry Highly Fragmented Market The Indian plastics processing industry is highly fragmented and small and micro-players constitute majority of the units. Indian Petrochemical Industry is facing intense competition from the Middle East countries where price of feedstock ranges between one- fifth to one- tenth the prices prevailing in international markets.

India's plastics market depends on labor intensive equipment which has adversely impacted the productivity. Unreliable power and high energy costs in India as compared with other countries are also constraints which hamper capacity utilization.

Addressing Environmental Issues While the usage and benefits of plastics are manifold, it invariably gets branded as a polluting material. The issue regarding the polluting characteristic of plastics needs to be addressed. Plastics are chemically inert substances but they do cause environmental and health hazards. If plastics can be collected and disposed of or recycled as per laid down guidelines/rules then the issue of plastic waste can be suitably addressed. There is wide scope for industries based on re-cycling of plastics waste. This issue however, presents an opportunity to explore substitutes which are environment friendly.

Technology needs The Indian Plastic processing industry has seen a shift from low output/low technology machines to high output, high technology machines. There has been some major technological advancement of global standards leading to achievements

Market Analysis However, India's technology needs are critical in areas like high production and automatic blow molding machines, multilayer blow molding, Stretch/ Blow Molding Machines, specific projects involving high CAPEX like PVC calendaring, multilayer film plants for barrier films, multilayer Cast lines, BOPP and Nonwoven depend solely on imported technology/machinery.

Other technological needs are: . Multilayer blown film line up to 9/11 layers . Automatic Block bottom bags production line . Higher tonnage Injection Molding machine >2000 T . Higher tonnage >500 T all electric Injection Molding machines

Price pressure The profits of plastics processing industry are facing tough times because of increased & volatile input prices. Increase in crude oil prices along with the continuous fall in rupee value has led to lower profits in spite of higher volume realizations. Also hurting the manufacturers are factors like hike in import duty on raw materials and cut-throat competition from neighboring countries.

Further, free trade agreements signed with countries like Malaysia, Thailand, etc. results in dumping of cheap plastic goods in the Indian market. Consequently, Indian manufacturers are facing stiff competition from these countries. Hike in import duty on polymers further compounded the situation of plastic manufacturers. Hence, imports of plastic products from neighboring countries increased, thereby impacting the volumes of the domestic plastic manufacturers.

Issues with Skilled Labor The Indian plastics market is comprised of around 40,000 companies and employs more than 4 million people. The growth rate of the Indian plastics industry is one of the highest in the world, with plastics consumption growing at 16% per annum (compared to 10% p.a. in China and around 2.5% p.a. in the UK). With a growing middle class (currently estimated at 50 million) and a low per capita consumption of plastics, currently 13kg per head, this trend is likely to continue.

Despite India having a population of 1.3 billion and a work force of 467 million, plastics companies have reported problems with labor shortages. This has led to increased investment in technology such as automation and conveyor belt systems.

Market Analysis FUTURE PROSPECTS – INDIAN PLASTIC INDUSTRY Emerging Applications of Plastic The Indian plastic processing sector comprises of three segments namely injection molding, blow molding and extrusion, catering to the requirements of a wide array of applications like packaging, automobile, consumer durables, healthcare, among others. The following figure depicts the key plastic application sectors where some emerging applications have been noticed

Automotive Long fiber reinforced thermoplastic (LFRT) is a new product which is used in making automotive products. It has the following benefits . Greater freedom . Potential for parts consolidation . Weight reduction . Extreme toughness/Durability . Dimensional stability . Corrosion & chemical resistance . Elimination of secondary operations like painting and welding . Lower total system cost

Textile fibers A new kind of fibers have been introduced which trap Infrared rays and keeps the body warm. It can be used to make woolen clothes for extremely cold weather.

Another category of fibers is used to make health care fabrics which can regulate the temperature & O2 levels in the body or provide protection against bacteria or are flame retardant.

Flexible packaging Flexible packaging is a sub segment of packaging industry and it is producing revolutionary products. These products focus on enhancing the of products by keeping intact the nutritional value of the enclosed product for e.g. Milk pouches & modified atmospheric packaging and has also reduced the cost of old style packaging considerably.

Market Analysis

Packaging Industry The following factors have played a vital role in the growth of the packaging industry in India over the years. Growth in Retail Increased presence of global multinational companies has boosted the demand in the processed food, beverages, cosmetics, consumer products, toiletries and pharmaceutical space. The manufacturing units, especially the fast moving consumer goods (FMCG) manufacturers are exploring new markets continuously through newer retail models. This has widened the market and also increased the demand of packaging of the products. Growth of Smaller Packaging The current middle class population in India is approximately 30 Cr. which indicate that from afford ability point of view, the demand for smaller packaging is huge. This population is rapidly growing and hence this will drive the growth for packaging industry. Smaller packaging caters to even the rural population and lower income groups Changing Lifestyle Since the concept of globalization has penetrated the Indian market, significant cultural changes have been witnessed. People today are buying more of branded products and thus packaging is playing an important role in creating and sustaining the brand equity. With a higher per capita income, the demand of personal hygiene products and convenience products has increased4 leading to increased demand for plastics.

Light-weighting Modern packaging—such as heat-sealed plastic pouches and wraps—helps keep food fresh and free of contamination. That means the resources that went into producing that food aren't wasted. It's the same thing once you get the food home: plastic wraps and re-sealable containers keep your leftovers protected—much to the chagrin of kids everywhere. In fact, packaging experts have estimated that each pound of plastic packaging can reduce food

Market Analysis waste by up to 1.7 pounds.

Plastics can also help you bring home more product with less packaging. For example, just 2 pounds of plastic can deliver 1,300 ounces—roughly 10 gallons—of a beverage such as juice, soda or water. You'd need 3 pounds of aluminum to bring home the same amount of product, 8 pounds of steel or over 40 pounds of glass. Not only do plastic bags require less total energy to produce than paper bags, they conserve fuel in shipping. It takes seven trucks to carry the same number of paper bags as fits in one truckload of plastic bags. Plastics make packaging more efficient, which ultimately conserves resources.

Plastics engineers are always working to do even more with less material. Since 1977, the 2- liter plastic soft drink bottle has gone from weighing 68 grams to just 47 grams today, representing a 31 percent reduction per bottle. That saved more than 180 million pounds of packaging in 2006 for just 2-liter soft drink bottles. The 1-gallon plastic milk jug has undergone a similar reduction, weighing 30 percent less than what it did 20 years ago.

Doing more with less helps conserve resources in another way. It helps save energy. In fact, plastics can play a significant role in energy conservation. Plastic bag manufacture generates less greenhouse gas and uses less fresh water than does manufacture. Not only do plastic bags require less total production energy to produce than paper bags, they conserve fuel in shipping. It takes seven trucks to carry the same number of paper bags as fits in one truckload of plastic bags.

Recycling & Waste Management of Plastics Recycling of plastics is one of the foremost steps towards innovation and sustainability in this industry. Currently in India, number of organized recycling units for plastics is ~3,500 along with additional ~4,000 unorganized recycling units. Most of the plastics (PE, PP, PVC, PET, PS,) etc. could be recycled via mechanical route. Whereas, engineering plastics like PBT, SAN and Nylon etc. are recycled by selected recyclers. In India, recycling of plastics is currently 4MnTPA and it provides employment to almost 1.6 Million people (0.6 million directly, 1 million indirectly).

The following figure shows the typical method.

Market Analysis The Life Cycle Analysis of various plastics products reveals that plastics create lesser environmental pollution in the atmosphere compared to the alternatives. Energy consumption, emissions of Green House Gases like CO2 and CH4, quantum of water usage - in all parameters plastics create lesser foot print on earth.

Currently, a very small percentage of plastics produced is used for recycling but the potential is much higher. As plastic consumption is expected to grow at more than 10% CAGR for the next 5 years, the scope of recycling of plastics is huge.

Going ahead it is expected that the awareness of consumers and support from government is likely to increase the recycling of plastics and increase the magnitude of plastic waste management.

Opportunity - Some form of plastics like plastics in packaging applications, plastics for some one-time use - like cups, plates etc. create waste management problems when the discarded plastics materials are not disposed of properly. Very thin plastic bags, though recyclable, are often left behind by the waste pickers due to economic reason.

To avoid this problem, MoEF, Government of India had come up with rules in September 1999, restricting the thickness and size of plastic carry bags. These Rules have undergone modifications in June 2003 and later in 4th February, 2011 amended 2nd July, 2011. In the recent rules manufacturers and brand owners who use such bags have been made responsible for the waste management activity along with the Municipality / Local Bodies. Some state governments have also completely banned the use of plastic carry bags which are below certain microns.

Best practices of other developed nations could be adopted for , which follow a covenant of better product design to ensure reduction, re-use and recycling of packaging materials.

Mechanical Recycling Opportunity - Concern over the perceived reduction of landfill capacity spurred efforts to mandate the use of recycled materials. Mandates, as a means of expanding markets, can be troubling. Mandates may fail to take health, safety and performance attributes into account. Mandates distort the economic decisions and can lead to sub optimal financial results. Moreover, they are unable to acknowledge the life cycle benefits of alternatives to the environment, such as the efficient use of energy and natural resources.

Feedstock Recycling Pyrolysis involves heating plastics in the absence or near absence of oxygen to break down the long polymer chains into small molecules. Under mild conditions polyolefins can yield a petroleum-like oil. Special conditions can yield monomers such as ethylene and propylene. Some gasification processes yield syngas (mixtures of hydrogen and carbon monoxide are called synthesis gas, or syngas). In contrast to pyrolysis, combustion is an oxidative process

Market Analysis that generates heat, carbon dioxide, and water.

Chemical recycling is a special case where condensation polymers such as PET or nylon are chemically reacted to form starting materials.

Source Reduction Source reduction is gaining more attention as an important resource conservation and solid waste management option. Source reduction, often called "waste prevention" is defined as "activities to reduce the amount of material in products and packaging before that material enters the municipal solid waste management system."

Opportunity - Source reduction activities reduce the consumption of resources at the point of generation. In general, source reduction activities include: . Redesigning products or packages so as to reduce the quantity of the materials used, by substituting lighter materials for heavier ones or lengthening the life of products to postpone disposal. . Using packaging that reduces the amount of damage or spoilage to the product. . Reducing amounts of products or packages used through modification of current practices by processors and consumers. . Reusing products or packages already manufactured. . Managing non-product organic wastes (food wastes, yard trimmings) through backyard composting or other on-site alternatives to disposal.

Dynamics Driving Growth in the Indian Plastic Market The Indian Plastic industry is at the verge of high growth rate over about 10%-12% which is contributed by high growth rates, in turn, from the end-user industries. This trend has mainly been driving the automotive sector, since the economy is already showing signs of recovery from the downturn. As the Plastic industry is heavily dependent on automotive sector, launching of new cars in the small segments is driving the demand for plastics. India is likely to dominate the rest of the world's plastic with the domestic per capita consumption by 2025.

As the domestic Indian Plastic Industry expects for the investment of nearly $80 billion over the next four years. Indian government has identified the petrochemicals industry as a 'high priority' sector, as it is owing to the fact that plastics play an important role in providing the basic necessities for everyday use, while conserving the scarce natural resources. Plastic plays a significant role in the key sectors of the economy, including agriculture, water management, automobiles, transportation, construction, telecommunication and electronics, besides defence and , computers and power transmissions.

As of now the Indian Plastic industry has enormous potential for growth as polymer use in India is far below the world level. With increasing competition in the global market and the constant drive to improve living standards, the scope for use of plastics is bound to increase manifold and make the production double in the coming years.

Market Analysis

 Indian economic fundamentals are robust despite current gloom and continuing uncertainty in global economy and liberal foreign investment policies of present Government.  Huge growth opportunities in India for Plastics due to lower per capita consumption as compared to world average coupled with low tax structure & labor cost.  Flexible packaging industry poised for strong growth, insulated from the current economic scenario due to huge & diversified consumer base.  New applications / in Packaging development is driving growth in India which is ably supported by the current and upcoming domestic PE Capacities.

Other Factors Driving the Indian Plastic Industry  The strength of Indian petrochemical resource  Availability of skilled manpower and training centers  Presence in all key segments of downstream plastic processing  Large and growing market for converted products  Transformation of the four key industries - automobile, retail, food and agriculture  Large consumption base for specialty chemicals  Billion dollar packaging industry  Large entrepreneurial base  Large skill base

Indian Plastics - Vision 2020 India’s growth drivers for 2020  Create employment opportunity for 6 million workers in the segment. (from current level of 4 million workers in plastic industry, directly and indirectly.  India entering the league of developed nations by 2020  Productivity growth to help India sustain > 8% growth  Per Capita GDP will more than double  Demand for automobiles to increase five fold  Additional 100 million work force  140 million rural dwellers to move to urban areas  Infrastructure (Rail, & Ports) to attain global standards

Replacement Opportunity Short-term Opportunity . Commodity plastics comprising of Polyethylene (PE), Polypropylene (PP), Polyvinyl Chloride (PVC) and Polystyrene account for bulk of the plastic consumption in India. India has ramped up its production capacity for plastic to reach 2.9 MnTPA for PE, 3.7 MnTPA for PP and 1.3MnTPA for PVC. With increased supply of plastics, the focus is now on the downstream plastic processing industries and their profitability . There are several factors like low per-capita consumption, manufacturing focus, end use industry growth, availability of feedstock, increasing urbanization, changing lifestyle, demographic dividend etc. promoting growth of plastic across India. Spill off benefit of promoting plastic processing is the huge inherent employment potential. . Many application areas of plastics also have overlaps that make market driven

Market Analysis material substitution a good possibility. There are strategic objectives driven by part consolidation and sustainability compulsions by the user industry that have made material selection converge to a polymer to promote recycling.

Long term Opportunity The plastic processing industry has changed our lives in many aspects. It has the potential to continue to change the way we grow our crops, the way we build our , and the way we live everyday life. It has significant impact on our economy, generation of wealth and in job creation.

Plastics processing industry will need to invest in modern equipment to reduce costs and improve performance and improve installed capacities to achieve economies of scale so that the Indian subcontinent can reach its full potential.

With Government's current campaign on 'Make in India' which has a special focus on the and aims to turn the country into a global manufacturing hub, a tremendous growth in the plastic processing sector is expected especially in downstream industries. The government should not hesitate to provide better infrastructure and favorable policies. Due to low plastic consumption in agricultural industry, the government should encourage the penetration of plastics into the agricultural industry.

. India's industry still suffers competitively because it's much smaller than China's plastics sector. China has three to 20 times more production of most types of polymers than India, even though their populations are relatively equal. But the rising costs and economic challenges of China are an opportunity.

. Some of the long-term drivers include rural income that's expected to triple by 2020, to a total of $1.8 trillion, and annual car production projected to grow from 1.7 million last year to 9.3 million by 2020.

. In addition, the Indian government plans to spend $1 trillion dollars on infrastructure by 2020, the market for electronics goods will grow by 700 percent and country's manufacturing sector will likely jump from the world's 12th largest now to number seven by 2025.

The following are some new technologies which have the potential to take the plastic processing industry to one step ahead.

Opportunity - Use of bio technology for polymers Bio technology can be a powerful new driver for innovation. It also allows the use of non-petroleum renewable feedstock. This in turn can improve the carbon foot print and also reduce generation.

Opportunity - Polymers from CO2 Using carbon dioxide as a feedstock instead of conventional petroleum- derived raw materials is an attractive alternative to produce polymers. Developing processes and products that are "sustainable" and have reduced "carbon footprint" have been important goals. CO2 is abundant, renewable, and inexpensive.

Market Analysis

Recycling - Along with earning adequate returns for shareholders, businesses should fulfill societal obligations such as recycling of plastic waste. Effective waste management solutions should be developed by all stakeholders including municipalities.

One method of sustainable recycling can be the collection of used waste bottles and recycling it to other useful forms such as fibers for pillows. This can reduce the land fill and also provides earning opportunities to the down trodden.

With adequate support from Government and growth in end use demand, our study indicates that the market for plastic processing industry in India is expected to grow at a CAGR of 10% from FY'13 to reach 18 MnMT by FY '18. In value terms, it is likely to grow at a CAGR of 11% to reach INR 1,37,000 Cr. by FY '18.

Future of Plastics Market Indian Plastic Market 2020 . India’s consumption of plastics grew from 7.5 mn tons to 15 mn tons by 2015 and is set to be the third largest consumer of plastics in the world. India’s plastics processing sector will grow from 69,000 machines to 150,000 machines by the year 2020. . India’s demand for plastics in irrigation alone is pegged to cross 2.5 mn tons by 2015. Plastics in packaging consume 3.5 mn tons of polymers and will increase to 9 mn tons by 2020. Indian automobile industry is growing at more than 18% p.a. and is hungry for plastics. . In terms of plastics, India will become world’s third largest consumer by the next decade, looking at an upstream investment demand in excess of US$ 37 bn. The Indian plastics and polymers industry is set to grow explosively, and visibly increase its global foot print.

Market Analysis

India – Enormous Untapped Potential

. Opportunity - There is a good scope for innovative products which will further contribute to growth of the sector in years to come. An example to this is the packaging industry which has witnessed a complete replacement of old age products with the new ones.

. India's industry still suffers competitively because it's much smaller than China's plastics sector. China has three to 20 times more production of most types of polymers than India, even though their populations are relatively equal. But the rising costs and economic challenges of China are an opportunity.

. Some of the long-term drivers include rural income that's expected to triple by 2020, to a total of $1.8 trillion, and annual car production projected to grow from 1.7 million vehicles last year to 9.3 million by 2020.

. In addition, the Indian government plans to spend $1 trillion dollars on infrastructure by 2020, the market for electronics goods will grow by 700 percent and country's manufacturing sector will likely jump from the world's 12th largest now to number seven by 2025.

. With India's population similar to China but polymer demand at only one-fifth of China, the Indian subcontinent's plastics industry has a good potential for growth. Strongly emerging segment of population having disposable income is raising living standards and increasing consumption of a wide range of consumer goods from packaged foods to automobiles. Investment in infrastructure and agriculture is also further fueling the demand of plastics and related products in the region.

. Opportunity - Whilst the outlook for plastics processing in the Indian subcontinent is undoubtedly positive, the industry still faces many challenges in terms of inadequate infrastructure & environmental issues.

Market Analysis

. The Indian plastic industry clearly has the potential to continue its fast growth. However, over the next few years, competition in the industry is expected to increase considerably, as a result of global trends, which will become applicable to the liberalizing economy of country.

. Opportunity - To survive the competition, both polymer manufacturers and processors will need to adopt radically new methods and approaches to reduce costs, improve market and customer service and management of performance.

. The per capita consumption of plastics in India is well below the world average. However, it also reflects the many years of growth ahead, as the country's economy continues to grow and upgrade the usage of products. Translating the expected growth rate into incremental demand, it is obvious that the country will remain one of the largest sources of additional demand for almost all kinds of plastics.

. Opportunity - It is clear that plastics will continue to be a growth industry, with boosting prospects for fresh investments in polymerization and downstream processing capacity. This is in contrast to the situation in various other countries, where growth prospects are limited, either because of stagnant demand or due to the historical over building. In such countries, the overall outlook would be far less promising, with the key imperatives being cost cutting and capacity rationalization.

. Opportunity - The structural story of Indian plastic industry is likely to remain robust over the next three to five years, due to favorable market conditions, increasing scope of plastic application (automobiles, consumer and electronic appliances) and changing consumer preference towards plastic products. In addition, low per capita consumption, strong replacement demand and huge opportunity under agriculture and construction sector, indicates a multiyear growth story of plastic industry.

Market Analysis APPENDIX

Plastic Bags Fact Sheet  Worldwide, a trillion single-use plastic bags are used each year, nearly 2 million each minute.  The amount of energy required to make 12 plastic shopping bags could drive a car for a mile.  City, state, and national governments around the world are trying to limit plastic bag litter and waste with bans and fees.  The oldest existing plastic bag tax is in Denmark, passed in 1993. Danes use very few light-weight single-use plastic bags: about 4 per person each year.  At least 16 African countries have announced bans on certain types of plastic bags, to varying levels of effectiveness. Before a ban on thin bags—which tear readily and get caught by the wind— went into effect in 2003, plastic bags were christened South Africa’s “national flower” because of their prevalence in bushes and trees. Thicker bags are taxed.  Many European countries tax plastic bags or ban free distribution. The EU Parliament is discussing measures that could require member states to cut plastic bag use by 80 percent by 2019. A memo on the proposal noted that “plastic bags have been found in stomachs of several endangered marine species,” including various turtles and porpoises, and 94 percent of North Sea birds.  The provinces of Ontario and Quebec have each halved their plastic bag use through a variety of measures, including store incentives for using reusable bags and retailer-imposed fees.  choking on plastic bags—from camels in the United Arab Emirates to sheep in Mauritania and cattle in India and Texas—have led communities to consider regulation.  Currently 100 billion plastic bags pass through the hands of U.S. consumers every year—almost one bag per person each day. Laid end-to-end, they could circle the equator 1,330 times.  Over 150 U.S. cities and counties ban or require fees for plastic bags. California passed the first statewide ban in 2014, though Hawaii had a de facto ban through county ordinances. Over 49 million Americans live in communities that have passed plastic bag bans or fees.  U.S. cities with bag bans include San Francisco (as of 2007), Portland (2011), Seattle (2012), Austin (2013), Los Angeles (2014), Dallas (to begin in 2015), and Chicago (2015).  The plastics industry has spent millions of dollars to challenge plastic bag ordinances. Washington, D.C., was the first U.S. city to require food and alcohol retailers to charge customers 5ȼ for each plastic or paper bag. Proceeds are shared between stores and environmental clean-ups.

Market Analysis Plastic Bags Plastic shopping bags, carrier bags, or plastic grocery bags are a type of plastic bag, that used as shopping bag and made from various kinds of plastic. In use by consumers worldwide since the 1960s, these bags are sometimes called single-use bags, referring to carrying items from a store to a home. However, reuse for storage or trash is common, and modern plastic shopping bags are increasingly recyclable or biodegradable. In recent decades, numerous countries have introduced legislation restricting the sale of plastic bags, in a bid to reduce littering and . Some reusable shopping bags are made of plastic film, fibers, or fabric.

History American and European patent applications relating to the production of plastic shopping bags can be found dating back to the early 1950s, but these refer to composite with handles fixed to the bag in a secondary manufacturing process. The modern lightweight shopping bag is the invention of Swedish engineer Sten Gustaf Thulin. In the early 1960s, Thulin developed a method of a simple one-piece bag by folding, welding and die- cutting a flat tube of plastic for the packaging company Celloplast of Norrköping, Sweden. Thulin's design produced a simple, strong bag with a high load-carrying capacity, and was patented worldwide by Celloplast in 1965.

Celloplast was a well-established producer of cellulose film and a pioneer in plastics processing. The company's patent position gave it a virtual on production, and the company set up manufacturing plants across Europe and in the US. However, other companies saw the attraction of the bag, too, and the US petrochemicals group Mobil overturned Celloplast's US patent in 1977.

The Dixie Bag Company of nothing, owned and operated by Jack W. McBride, was one of the first companies to exploit this new opportunity to bring convenient products to all major shopping stores. The Dixie Bag Company, along with similar firms such as Houston Poly Bag and Capitol Poly, was instrumental in the manufacturing, and perfecting of plastic bags in the 1980s. Kroger, a Cincinnati-based grocery chain, began to replace its paper shopping bags with plastic bags in 1982,and was soon followed by its rival, Safeway. Without its plastic bag monopoly, Celloplast's business went into decline, and the company was split up during the 1990s. The Norrköping site remains a plastics production site, however, and is now the headquarters of Miljösäck, a manufacturer of waste sacks manufactured from recycled polyethylene.

From the mid-1980s onwards, plastic bags became common for carrying daily groceries from the store to vehicles and homes throughout the developed world. As plastic bags increasingly replaced paper bags, and as other plastic materials and products replaced glass, metal, stone, timber and other materials, a packaging materials war erupted, with plastic shopping bags at the center of highly publicized disputes.

Market Analysis Production Although few peer-reviewed studies or government surveys have provided estimates for global plastic bag use, environmental activists estimate that between 500 billion and 1 trillion plastic bags are used each year worldwide.

Manufacture and Composition Traditional plastic bags are usually made from polyethylene, which consists of long chains of ethylene monomers. Ethylene is derived from natural gas and petroleum. The polyethylene used in most plastic shopping bags is either low-density (resin identification code 4) or, more often, high-density (resin identification code 2). Color concentrates and other additives are often used to add tint to the plastic. Plastic shopping bags are commonly manufactured by blown film extrusion.

Biodegradable Materials Some modern bags are made of vegetable-based bioplastics, which can decay organically and prevent a build-up of toxic plastic bags in and the natural environment. Bags can also be made from degradable polyethylene film or from polylactic acid (PLA), a biodegradable polymer derived from lactic acid. However, most degradable bags do not readily decompose in a sealed landfill, and represent a possible contaminant to plastic recycling operations. In general, bags need to be kept separate from conventional plastic recycling systems.

Types of Plastic Bags  High Density Polyethylene (HDPE) Bags – This type of plastic is used to make unbranded ‘singlet’ bags that are commonly used in supermarkets, service stations and food outlets. HDPE is manufactured from ethylene and is a by-product of gas or oil refining. These types of bags are fully recyclable but do not biodegrade.  Low Density Polyethylene (LDPE) – These are generally branded and used as ‘boutique’ bags at stores selling higher value goods at department stores. LDPE is also manufactured from ethylene and is a by-product of gas or oil refining. Like HDPE, LDPE does not biodegrade. There are no recycling programs in King County for LDPE bags.  Non-woven Polypropylene – This type of plastic is used to make ‘reusable’ bags. There is currently no recycling market for polypropylene bags at end-of-life due to their relatively low volume in King County. Non-woven polypropylene is also non- biodegradable.  Opportunity - Degradable Plastic Bags – Degradable plastic is designed to undergo changes in its chemical structure under specific environmental conditions. It can be broken down by chemical or biological processes. There are 5 different types of degradable polymers:  Biodegradable polymers – A degradable plastic where degradation results from naturally occurring microorganisms, such as bacteria, fungi and algae.  Compostable polymers – A plastic that undergoes degradation by biological processes during composting. In the proper environment, compostable plastic is completely biodegradable and can be completely consumed in 180 days or less. These bags would work well for simple uses, such as food service, lawn, grocery, department store and pet bag products.

Market Analysis  Oxi-biodegradable polymers – This type of plastic undergoes controlled degradation through additives that can trigger and accelerate the degradation process.  Photodegradable polymers – These bags break down when exposed to ultraviolet (UV) light or UV-sensitive additives.  Water-soluble polymers – Water soluble polymers dissolve in water within a specific temperature range.

Environmental Concerns Opportunity Because of the Plastic bags are so durable, this makes them a concern for the environment. They will not break down easily and as a result hurt our wildlife. Each year millions of discarded plastic shopping bags end up as plastic waste litter in the environment when improperly disposed of. The same properties that have made plastic bags so commercially successful and ubiquitous — namely their low weight and resistance to degradation — have also contributed to their proliferation in the environment. Due to their durability, plastic bags can take centuries to decompose.

On land, plastic bags are one of the most prevalent types of litter in inhabited areas. Large buildups of plastic bags can clog drainage systems and contribute to flooding, as occurred in Bangladesh in 1988 and 1998 and almost annually in Manila. Littering is often a serious problem in developing countries, where trash collection infrastructure is less developed than in wealthier nations.

Plastic bags were found to constitute a significant portion of the floating marine debris in the waters around southern Chile in a study conducted between 2002 and 2005.If washed out to sea, plastic bags can be carried long distances by ocean currents, and can strangle marine animals.

Reduction, Reuse and Recycling Opportunity Plastic shopping bags are in most cases not accepted by standard curbside recycling programs; though their composition is often identical to other accepted plastics, they pose problems for the single-stream recycling process, as most of the sorting equipment is designed for rigid plastics such as bottles, so plastic bags often end up clogging wheels or belts, or being confused as paper and contaminating the produced later in the stream.

Some large store chains have banned plastic shopping bags such as Whole Foods in the U.S. and IKEA in the U.S. and the U.K. Heavy-duty plastic shopping bags are suitable for reuse as reusable shopping bags. Lighter weight bags are often reused as trash bags or to pick up pet feces. All types of plastic shopping bag can be recycled into new bags where effective collection schemes exist.

By the mid-1900s, the expansion of recycling infrastructure in the United States yielded a 7% annual rate of plastic bag recycling. This corresponded to more than 800,000,000 pounds (360,000 tons) of bags and plastic film being recycled in 2007 alone. Each ton of recycled plastic bags saves the energy equivalent of 11 of oil, although most bags are produced

Market Analysis from natural-gas-derived stock. In light of a 2002 Australian study showing that more than 60% of bags are reused as bin liners and for other purposes, the 7% recycling rate accounts for 17.5% of the plastic bags available for recycling.

According to the UK's Environment Agency, 76% of British carrier bags are reused. A survey by the American Plastics Counsel found that 90% of Americans answer yes to the question "Do you or does anyone in your household ever reuse plastic shopping bags?" UK Environment Agency published a review of supermarket carrier bags and compares energy usage of current styles of bag.

Bag Legislation Several countries, regions, and cities have enacted legislation to ban or severely reduce the use of disposable plastic shopping bags. Outright bans have been introduced in some countries, notably China, which banned very thin plastic bags nationwide in 2008. Several other countries impose a tax at the point of sale.

In many countries of the world, there has been a phase-out of lightweight plastic bags. Single-use plastic shopping bags, commonly made from high-density polyethylene (HDPE) plastic, have traditionally been given free to customers by stores when purchasing goods—a popular method considered a strong, cheap, and hygienic way of transporting items. Problems associated with plastic bags include use of non-renewable resources (such as crude oil, gas and coal), disposal, and environmental impacts.

Governments all over the world have taken action to ban the sale of lightweight bags, charge customers for lightweight bags and/or generate taxes from the stores who sell them. The Bangladesh government was the first to do so in 2002, imposing a total ban on the bag. Such a ban has also been applied in countries such as Rwanda, China, Taiwan and Macedonia. Some countries in Western Europe impose a fee per bag. Bans, partial bans, and fees have been enacted by some local jurisdictions in North America, Australia, the United Kingdom, and Myanmar. Concurrently with the reduction in lightweight plastic bags, shops have introduced reusable shopping bags.

Market Analysis Phase out of lightweight plastic bags around the world. ◼ Plastic bags banned; ◼ A tax on some plastic bags; ◼ Partial tax or ban (municipal or regional levels)

India

Various levels of government have tried to regulate plastic bags to little effect. In 1999, the Indian government banned very thin plastic bags used to carry food. There have been multiple attempts to ban plastic bags in Delhi. After plastic bags were implicated in severe flooding, Mumbai, the capital city of India’s largest state, Maharashtra, tried to ban plastic bags. Later the entire state tried twice to institute a ban. All these efforts have been unsuccessful due to poor enforcement and pressure from the quickly growing plastics industry. Pune, also in Maharashtra, is the latest city to attempt banning plastic bags, passing legislation in February 2014.

In 2002, India banned the production of plastic bags below 20 µm in thickness to prevent plastic bags from clogging of the municipal drainage systems and to prevent the cows of India ingesting plastic bags as they confuse it for food. However, enforcement remains a problem.

Opportunity In March 2016, India notified new plastic waste management rules for the country, replacing the earlier ones made five years ago. The new rules, which are more stringent than the previous rules, will be implemented across the country within 6 months. Under the new rules, carrying certain dos and don'ts for manufacturers, distributors, municipal bodies and panchayats, the government banned the manufacturing of plastic bags of below 50 microns as thinner bags currently pose a major threat to environment due to its non- disposability.

Manufacturers of plastic bags will have to make certain payments to states for its post-use disposal. The money, collected by the states from the manufacturers, will be given to local civic bodies and panchayats for taking multiple measures to dispose off plastic bags properly.

In 2016, Sikkim, India's first fully organic state, banned the use of not only packaged drinking water bottles in any government meetings or functions but also food containers made from polystyrene foam all over the state.

Himachal Pradesh was the first state to ban plastic bags less than 30 µm. The Karnataka state became first state to ban all forms of plastic carry bags, plastic banners, plastic buntings, flex, plastic flags, plastic plates, plastic cups, plastic spoons, cling films and plastic sheets for spreading on dining tables irrespective of thickness including the above items made of thermacol and plastic which uses plastic micro beads. The state of Goa has banned bags up to 40 µm thick, while the city of Mumbai bans bags below a minimum thickness to 50 µm.

Market Analysis There are a few Indian sates in which plastic has been banned  Bengaluru /Bangalore (Ban on plastics in Bengaluru was imposed from mid march 2016)  Sikkim  Maharashtra,  Delhi,  Punjab ( Chandigarh )  Rajasthan,  Himachal Pradesh,  Goa and  West Bengal

Issues Plastic bags cause many minor and major issues in geographical terms. The most general issue with plastic bags is the amount of waste produced. Many plastic bags end up on streets and are aesthetically displeasing.

Opportunity - Even when disposed of properly, they take many years to decompose and break down, generating large amounts of garbage over long periods of time. If not disposed of properly the bags can pollute waterways, clog sewers and have been found in oceans affecting the habitat of animals and marine creatures.

A car could drive about 11 meters on the amount of petroleum used to make a single plastic bag. Plastic bags can block drains, trap birds and kill livestock. The World Wide Fund for Nature has estimated that over 100,000 whales, seals, and turtles die every year as a result of eating or being trapped by plastic bags. In India, an estimated number of 20 cows die per day as a result of ingesting plastic bags and having their digestive systems clogged by the bags. It is also very common across Africa to have sewers and drain systems clogged by bags which cause severe cases of malaria due to the increased population of mosquitoes that live on the flooded sewers. The term "white pollution" has been coined in China to describe the local and global effects of discarded plastic bags upon the environment.

Lightweight plastic bags are also blown into trees and other plants and can be mistaken for flowers by animals affecting their diet. Plastic bags break down, but they never biodegrade. As a result, any toxic additives they contain—including flame retardants, antimicrobials, and plasticizers—will be released into the environment. Many of those toxins directly affect the endocrine systems of organisms, which control almost every cell in the body.[7] Research shows the average operating 'lifespan' of a plastic bag to be approximately 20 minutes. Plastic bags can last in landfill – an anaerobic environment – for up to 1000 years.

Market Analysis

India – Plastic Bags and the repercussions

India's plastics consumption is one of the highest in the world. Yet, precious little has been done to recycle, re-use and dispose of plastic waste. Plastic bags are difficult and costly to recycle and most end up on landfill sites where they take around 300 years to photo degrade. They break down into tiny toxic particles that contaminate the soil and waterways and enter the food chain when animals accidentally ingest them. But the problems surrounding waste plastic bags starts long before they photo degrade.

Plastic bags can be seen hanging from the branches of trees, flying in the air on windy days, settled amongst bushes and floating on rivers. They clog up gutters and drains causing water and sewage to overflow and become the breeding grounds of germs and bacteria that cause diseases

Animals and sea creatures are hurt and killed every day by discarded plastic bags by mistaking plastic bags for food is commonplace amongst marine animals. Plastic clogs their intestines and leads to slow starvation. Others become entangled in plastic bags and drown. Because plastic bags take hundreds of years to break down, every year our seas become 'home' to more and more bags that find their way there through our sewers and waterways. Given India's poor garbage collection facilities, tons of plastic bags litter the roads, preventing rainwater from seeping into the ground. Hundreds of cows die in New Delhi alone every year when they choke on plastic bags while trying to eat vegetable waste stuffed in the garbage.

Plastic bags choke drains Every bag that's washed down a drain during rainfall ends up in the sea every bag that's flushed down a toilet (many mall bags are), ends up in the sea - every bag that’s blown into a river will most likely end up in the sea. Besides choking drains, plastics are highly toxics. When burned they release cancer-causing gases. Lying in the garbage, polythene bags also find their way in gut of cattle, asphyxiating the animals. The cheap bags contain chemicals such as cadmium- or lead-based chemicals that are harmful to health. They leach into vegetables, meat and food.

Ban or Tax or What?  Measures to phase out single use plastic bags In order to limit the amount of single use plastic bags some countries opt for banning them, some others prefer taxing them and some others opt for voluntary agreements.

Banning them can be more effective in cases when they pose an imminent and clear danger but they depend on strong law enforcement capacity. Examples of countries that have banned are Italy, Rwanda or Bangladesh.

Market Analysis  Taxing single use plastic bags is an effective option to reduce its use and it can also raise some funds that can be used to fix the damage For example, Ireland, Denmark or Finland. Voluntary agreements whereby the shops and supermarkets commit to implement measures to reduce plastic bag consumption --- like charging for them --- based on previously agreed reduction targets are also a way to reduce bag use. For example, Belgium or Australia.

The Downfall of the Plastic Bag: A Global Picture Worldwide, a trillion single-use plastic bags are used each year, nearly 2 million each minute. Usage varies widely among countries, from over 400 a year for many East Europeans, to just four a year for people in Denmark and Finland. Plastic bags, made of depleting natural gas or petroleum resources, are often used only for a matter of minutes. Yet they last in the environment for hundreds of years, shredding into ever-smaller pieces but never fully breaking down.

Over the last century, plastic has taken over the planet. On the one hand, plastic seems a miracle material, with beneficial uses ranging from medical devices to making vehicles lighter and more fuel-efficient. On the other hand, it is a curse, allowing for the seemingly cheap mass production of disposable materials that fill up landfills, cloud the oceans, choke wildlife, and sully vistas. Filled with additives that lack a safety record, plastics have been linked with a slew of health concerns, including certain types of cancer and infertility. While plastics can be used and recycled wisely, the majority of those produced are neither. Perhaps no other item symbolizes the problems of our throwaway culture more than the single-use plastic bag.

Given the multitude of problems associated with plastic bags, many communities around the world have attempted to free themselves from their addictions by implementing bag bans or fees. The oldest existing bag tax is in Denmark. Passed in 1993, this regulation affected plastic bag makers who paid a tax based on the bag's weight. Stores were allowed to pass the cost on to consumers either in bag charges or absorbed into the prices of other items. The initial effect of this system was an impressive 60 percent drop in plastic bag use.

One of the most well-known bag measures is Ireland’s national bag tax, adopted in 2002. It was the first to charge consumers directly, starting at a rate of 15 euro cents (20ȼ) per bag. Within five months of the measure's introduction, bag usage fell by over 90 percent. Litter was greatly reduced as well. Over the years, bag use started to creep up, however, so in 2007 the charge was increased to 22 euro cents, and in 2011 the law was amended with the aim of keeping annual bag use at or below 21 bags per person. Frank Convery of College Dublin calls Ireland’s plastic bag levy “the most popular tax in Europe” and believes that it would be politically damaging to remove it.

Indeed, many communities looking at plastic bag reduction measures hope to emulate the Irish success. Other European countries where consumers pay for plastic shopping bags— either through law or voluntary initiatives—include Belgium, Bulgaria, France, Germany, Latvia, and the Netherlands. Throughout the European Union, member states will soon be required to take measures to reduce plastic bag use 80 percent by 2019.

Reducing the amount of plastics in the marine environment has been a major driver of bag

Market Analysis regulations in Europe and elsewhere. In a memo on its bag reduction proposal, the European Commission notes that “in the North Sea, the stomachs of 94 percent of all birds contain plastic. Plastic bags have been found in stomachs of several endangered marine species, such as green turtles, loggerhead turtles, leatherback turtles, black footed albatrosses, and harbor porpoises.” In sum, “at least 267 different species are known to have suffered from entanglement or ingestion of marine litter.” The desire to protect the whales that migrate off the coast of Tasmania led to Australia’s first local plastic bag ban in 2003. Now half of Australian states and territories ban plastic bags.

Beyond the seas, the reasons for taking action against plastic bags vary from malaria outbreaks associated with bags collecting water in Kenya to sewers clogged with plastic bags exacerbating flooding in Bangladesh, Cameroon, and the Philippines. Cattle choking on plastic bags gave impetus for bag regulations in Texas ranch country and in Indian communities concerned about the sacred cow. In the capital of Mauritania, an estimated 70 percent of cattle and sheep deaths are from plastic bag ingestion; in the United Arab Emirates, the concern is for camels.

The world’s strictest anti-plastic bag implementation strategy may be in Rwanda. Since a ban went into effect in 2008, passengers arriving from outside the country have recounted being forced to surrender plastic bags on arrival. It is unclear, however, how successful the ban is at reducing overall bag use, particularly in less urban areas, because of an active black market for plastic bags. In South Africa, where plastic bags caught in bushes and trees had become so common that they were called the national flower, a ban on the very thin non- biodegradable bags that tear readily and easily blow away went into effect in 2003. Thicker bags are taxed. Botswana’s plastic bag fee, which began in 2007, is credited with cutting bag use in half at major retailers. All told, at least 16 African countries have announced bans on certain types of plastic bags, to varying levels of effectiveness.

In China, where plastic bag pollution was widespread, a few cities and provinces tried to introduce policies to limit bag use in the 1990s, but poor enforcement led to limited success. Before Beijing hosted the 2008 Olympic Games, a national law went into effect banning extra thin bags and requiring stores to charge a fee for thicker bags. The Chinese government reported that bag use has dropped by more than two thirds, although compliance appears to be spotty. A number of cities in Southeast Asia, the source of many of the world’s plastic bag exports, have come up with legislation to reduce bag use.

In the United States, 133 city- or county-wide anti-plastic bag regulations have been passed. Bag bans cover one of every three Californians and virtually all Hawaiians. Chicago’s city council voted for a bag ban in April 2014. Dallas and Washington, D.C., are among the handful of jurisdictions that charge 5–10ȼ for each plastic or paper bag; in both cities, charges were instituted to reduce the number of bags in local rivers. In Canada, much of the anti-bag action is voluntary, with a number of retailers participating. The provinces of Ontario and Quebec have each halved their plastic bag use through a variety of measures, including store incentives for using reusable bags and retailer-imposed fees. Liquor stores in Manitoba, Quebec, and Nova Scotia have tossed out the plastic bag for good.

Latin America also hosts a number of initiatives to reduce plastic bag litter and waste,

Market Analysis including bans in the Chilean cities of Pucón and Punta Arenas and in the states of Buenos Aires and Mendoza in Argentina, to name a few. Carryout bags in a couple of Brazilian states are required to be biodegradable. São Paulo state banned free single-use plastic bags starting in January 2012, allowing heavy reusable or biodegradable bags to be sold for 10ȼ, but the measure was removed by an industry-supported court injunction, despite the backing of the supermarket trade association. Similarly, Mexico City banned plastic shopping bags in 2009, but, under pressure from plastics manufacturers, the measure was replaced before enforcement began with a recycling initiative—a common tactic used by industry groups around the world against stricter bans or fees.

Plastic bags clearly have a cost to society, one that is not yet fully paid. Reducing disposable bag use is one small part of the move from a throwaway economy to one based on the prudent use of resources, where materials are reused rather than designed for rapid obsolescence.

Market Analysis Quick Facts

On average, plastic bags are used for 25 minutes!

It takes between 100-500 years for a plastic bag to disintegrate (depending on the type of plastic)

2 million plastic bags are in use around the world/ 1 minute

The average European uses about 500 plastic bags/year Europeans overwhelmingly support a ban on single-use plastic bags.

80% of marine litter is plastic

3.4 million tons of plastic carrier bags are produced in the EU each year. This corresponds to the weight of more than two million cars!

Market Analysis Campaign Against Plastic Bags

SINGLE-USE PLASTIC BAGS ARE…

! BAD FOR THE PLANET They take 100s of years to degrade and they not only pollute the environment but actually directly harm many living organisms ! BADLY DESIGNED It doesn’t make sense to produce something that lasts 100s of years when it is going to be used for a few minutes. It is a contradiction that in a throw-away society nothing good lasts whilst bad products are forever. ! UGLY! Reusable bags are a lot cooler! ! EXPENSIVE Producers don’t take responsibility for the impact of their product. Plastic bags are cheap to produce but very expensive to clean from the environment. ! BAD FOR YOUR MIND They embody the message of the throw-away society that is trashing the planet. ! UNFAIR Future generations will suffer from the pollution caused by plastic bags, without getting any of the benefit. Future generations don’t vote, but they count. ! 92% OF THE 95,5 BILLION carrier bags in the EU in 2010 ! MADE OF CRUDE OIL i.e. a finite resource ! GET INTO THE FOOD CHAIN Pulverized plastic waste in the sea gets into the food chain