Plastics are the 6th largest traded products, globally. Indian plastic exports are estimated to be around $ 7.6 billion (Rs. 45,000 crores), accounting for around 3 per cent of our total exports. Top destinations for Indian plastics include USA, China, UAE and United Kingdom. There are over 2300 exporters in India, largely located in Maharashtra and Gujarat. The exporters include both large manufacturers such as Garware-Wall Ropes Ltd, Supreme industries Limited and a number of small and medium enterprises.
Figure 1: Plastic exports-product wise and country wise breakup
Source : Plastics Export Promotion Council
 In FY 16
 There are around 2300 exporters registered with the Plastics Export Promotion Council
Raw materials (polymers) account for around 30 per cent of our plastics export and value added products for the remaining 70 per cent. Among value added products, plastic sheets, woven sacks, table and kitchenware are the key products. The exports of these products have increased at a CAGR of around 12-20 per in the past decade (Table 1)
|Table 1. Growth in key categories of Plastics (INR crs.)|
|HS code||Item||2006-07||2016-17||CAGR (%)|
|39269099||Miscellaneous plastic products||315.82||2,093.41||20.82|
|39232990||Plastic sacks bags||439.73||1,964.31||16.15|
|39269080||PP articles such as woven sacks||226.71||1,191.73||18.05|
|39239090||Plastic articles for conveyance and packaging such as crates||160.16||615.81||14.42|
|39219099||Plastic sheets, films, foils strips, plates, etc.||30.33||575.69||34.22|
|39219096||Laminated Flexible packaging items (plates, sheets, films, foils, strips. Etc.)||58.93||393.84||20.92|
|3917||Tube , Pipes and Hoses and fittings||284.99||947.19||12.76|
|39241010||Plastic insulated Tableware Kitchenware||89.81||386.24||15.71|
|Source : Directorate General of Foreign trade|
How To Tap The Export Market
Entering the foreign requires a lot of preparation towards market research and product development, as the products have to meet the requirements of new customers, who may have different standards of quality, design and product packaging. Also, diversifying into exports entails extensive documentation of company’s processes related to quality, purchase and sales, thus requiring a few dedicated resources. As such, venturing into export market comprises following steps:
Select The Market
Markets can be selected based on size of the opportunity, ease of entry and company’s competitiveness vis a vis other suppliers. The below given graph highlights key markets for various plastic products.
|Table 2. Top export markets for key Plastics products|
|HS code||Item||Country||Country’s share in Indian plastics exports|
|39269099||Miscellaneous plastic products||U. S.||21%|
|39232990||Plastic sacks & bags||U.K||13%|
|39239090||Plastic articles for conveyance and packaging such as plastic crates||U K||12%|
|U A E||10%|
|U S A||9%|
|39269080||PP articles||U S A||61%|
|Source : Directorate General of Foreign trade|
As can be seen, the key markets are different for each category of product, for example in FY16, UK accounted for the highest share in exports for plastic bags and sacks, whereas USA was the largest buyer for polypropylene (PP) products. One can do a detailed market analysis to understand the key consumer countries as well as other suppliers that are supplying to the same market and the competitiveness of your goods vis a vis other suppliers.The competitiveness of the product also gets impacted by the trade and non-trade barriers as explained below.
These refers to custom related tariffs, anti-dumping duties that are imposed on the imported products by the countries so as to protect their domestic industry. For example, recently Govt of USA announced its plans to levy a tariff of 25% on imported steel and a 10% of Tariff on imported Aluminium products from a number of countries except Canada, Mexico.
However, the import tariffs are typically lower among trading partners who are party to different agreements such as Free Trade agreements (FTA), Comprehensive Economic Agreement (CEA) etc. For example, India has trade agreementswith a number of countries including ASEAN, whereby the tariff on a number of products among the ASEAN countries is gradually being brought down to zero. Many of ASEAN members are importers of plastics (HS code 39) and India currently has very limited share in these markets (see Table 4), thereby presenting an opportunity.
|Table 3. Plastic imports by ASEAN countries , 2016|
|Country||Country wise Plastic imports from the world ($ mn)||Country wise plastics imports from India ($ mn)||Share of India in plastic imports|
|Source : Strengthening ASEAN-India Partnerships: Trends and Future prospects, a report by Export-Import bank of India|
Non Trade Barriers
These refers to legislations/other technical requirements that make it very expensive for Indian products to access a particular market. For example the cost of certifications of food grade plastics products in US and Europe are high at around $ 4000-5000 per product per year, thus making it very difficult for Indian SMEs to target these markets.
As such it may be easier for a new exporters to start with Asian markets, where the customers’ preferences are similar to India. However a detailed analysis of market size and competitiveness of our products vis a vis other suppliers is a must.
Market Entry Strategy
Having selected the market, a company can choose to enter the market by directly contacting the buyer, selling to a local distributor or participating in a joint venture with a local partner.The trade fairsand buyer’s sellers meet are commonly used by SMEs to identify the buyers as well as test market their products. Some of the trade fairs related to plastics industry include National Plastics Exhibition (NPE), USA, Chinaplas (a plastics and rubber trade fare in China) and Plastindia (Plastic trade fare in India).
The ministry of MSME offers a number of schemes to exporters for market development assistance including exposure visits to foreign markets and concessions in stall charges and air fare to participate in exhibition. These schemes are administrated by Plastics Export Promotion Council (PLEXCONCIL) or Federation of Indian exporters (FIEO), who also organise trade fares in India and facilitate meeting with international buyers.
Meet The Technical Requirements
The exporters need to comply with the technical requirements of the destination country and obtain relevant product certifications. These certifications can be broadly divided into two parts: certifications related to process and safety such as ISO and product related certifications.In general, product certifications required for US and Europe markets are more stringent than those needed for Asian, African and other markets. A summary of important certifications across plastic products is provided below.
|Table 4. Technical Certifications for plastics products|
|Injection moulded products||ISO and product certification based on applications|
|Pipes and fittings||Water Regulation Advisory Scheme (WARS) for UK, NSF for USA, DVGW for Germany|
|Food grade plastics||US FDA guidelines, European Commission (EC ) guidelines|
|Toys||Consumer product safety improvement act (CPSIA) in USA, EU Toy Safety Directive in Europe|
|Woven sacks||Labour data certificate for FIBC (Flexible intermediate bulk container)|
|Source : Discussion with NSF officials and FineTrain research|
Estimate The Capital Investment And Profitability Of Export Market
The costs can be divided into two categories: fixed cost and variable costs. The fixed cost or capital investment required for the export market would depend on the product adaptations/customisations, certification costs and working capital requirements.The working capital cycle can be up to 3 months including the time realised in getting the payment from the buyers as well as for claiming refunds/incentives from the government.
The price of the product in foreign markets should factor the costs such as commercial costs (shipping, packaging, and duties, insurance), marketing costs over and above the product cost.The marketing expenses such as cost of catalog, samples and visits to the destination country can add up to a significant chunk.
Some of the common costs that are incurred by the exporters include transport cost from factory to port of departure, import duty and taxes, custom clearance, ground transportation from port to customer’s warehouse and marketing agent’s commission.
As such the exporter needs to factor in both fixed and variable before quoting the price and also estimate the minimum volumes they need to sell to recover their costs.
Secure The Order And Finalise Trade Terms
Once the buyer is interested in your product, the next steps would be to finalise the trade terms also known as Incoterms. These typically define the responsibilities of buyers and sellers and costs and risks undertaken by each party. Some of the commonly used terms include EXW (pricing is ex-factory and buyer is responsible for the transport/insurance), FOB (Free on Board, pricing includes cost of transport till the port of origin) and CIF (Cost insurance and freight, the pricing includes the freight costs and insurance required for transporting the goods to destination).
How Can We Help?
If you are interested in exporting your plastics products, we can assist you in the following
- Identifying potential markets for your products
- Viability study for entering a particular market
- Assistance in generating a list of potential buyers and in scheduling meetings
 Based on discussions with NSF International’s office in India
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