Benefits of Foreign Investment in Indian Paper Industry.

Indian Paper and Packaging Industry

Apart from protecting the contents placed inside, packaging plays a vital role in representing the brand and conveying the product message. Thus, for any type of product, its packaging plays an important role. So, with increasing consumer demand, changing lifestyles, and increasing disposable income, the paper and packaging industry is poised to grow in tandem.

As per reports, the paper and packaging industry segment is predicted to expand at 12.60% CAGR between 2023 and 2028, reaching USD 130.14 billion. Hence, international firms have their eyes on the Indian paper and packaging industry for expanding their business.

But, given the vast expanse of this market, foreign companies can face a lot of problems while starting their operations. Thus, experts always advise opting for paper and packaging consulting to deal with such hassles.

Key Attributes of the Indian Paper and Packaging Industry

Before making entry and expansion plans, businesses must understand the key features of India’s paper and packaging industry. Some of them are as follows:

• Drive Towards Eco-Friendly Packaging

As industries around the world are becoming more environmentally conscious, they have started adopting sustainable packaging solutions. Thus, there is an increasing demand for paper-based packaging, as they are biodegradable and do not harm the environment like their plastic counterparts.

This trend is acting as a key driver behind the growth of India’s paper and packaging industry.

• Demand From Multiple Sectors

There are several industry segments like as moving Consumer Goods (FMCG), agriculture, pharma, e-commerce, etc., which depend on the paper and packaging industry for finishing the production of their goods.

For example, as online food and beverage deliveries are increasing, so is the demand for tamper-proof packaging, which can keep the items fresh and uncontaminated till they are delivered to the customer.

Now, coming to pharma, blister packs are one of the most in-demand packing materials. They are used for syringes, tablets, vials, ampoules, etc. Additionally, some products have three layers of packaging – primary, secondary, and tertiary, to protect the integrity of each dose. As demand for pharmaceutical products rises, the need for such packaging materials will increase in proportion, contributing to the sector’s growth.

In e-commerce, all goods need to be properly packed so that they stay in a pristine condition until they are delivered. Fragile items tend to have multiple layers of packing for added protection. Thus, as digital sales rise, the demand for packaging materials will increase manifold.

• Changing Industry Trends

After the COVID-19 pandemic, consumers have been increasingly focusing on healthcare and hygiene. Thus, the demand for tissue paper, table napkins, toilet paper, paper towels, etc. has seen a massive growth. Moreover, there is a rising trend of using paper straws as plastic ones tend to harm marine life.

But plastic is not being ditched by all industries though. Companies that deal with agricultural items, chemicals, fertilizers, etc. need leakproof packaging material that can protect the contents from outside contamination. So, they are extensively using plastic sacks for this purpose.

These factors show that there is ample scope for innovation in the Indian packaging industry. Foreign firms can thus leverage these opportunities to enter this market and make a place for their brands.

Benefits of Investing in Indian Paper and Packaging Industry for Foreign Companies

Here are some of the benefits which foreign companies can get by investing in the Indian paper and packaging industry:

• Industry Friendly Policies

To enable foreign companies to acquire controlling ownership over Indian companies, the government allows up to 100% FDI investments via the automatic route in the paper and packaging segment. Additionally, the authorities have initiated the National Packaging Initiative to promote the overall growth of this sector.

It includes developing certified programs and training facilities to ensure the availability of skilled labor. This scheme also includes the creation of logistics parks, material recovery facilities, setting guidelines for package material and design, etc.

All these policies will improve the ease of doing business for foreign firms, thus contributing to the sector’s overall growth.

• Increasing Packaging Material Exports

When it comes to exporting packaging materials, India plays a leading role in the global market. In 2021-22, the country made exports worth USD 1,119 million. In comparison to the figures in 2018-19, this shows a CAGR of 9.9%.

The top 5 export destinations are the United States of America, the United Kingdom, the United Arab Emirates, the Netherlands, and Germany. So, foreign companies planning to shift operations to India can get exposure to several other markets, which can help scale their business.

Now, given these benefits, it is quite natural for businesses to face intense competition while entering this market. Thus, businesses should opt for the services of packaging consulting in India to gain an edge over the competition.

How Strategic Consulting Firms Can Help?

For any foreign business, starting its business in a new market poses several challenges. They can range from finding vendors to manufacture their products, recruiting the right employees, and a lot more.

In this regard, getting in touch with Strategic Consulting Firms firms like Tecnova can be a smart move. These organizations offer services like India Sourcing and Vendor Development, which can help companies sustainably manufacture their products in India.

This not only reduces the cost of production but also negates the hassles of transporting goods from the company’s home country. These firms can also help find suitable employees, who can take up leadership positions in their clients’ organizations.

Now, foreign companies can do all these on their own, but it will require the allocation of additional labor and resources. Moreover, if not done correctly, this can prove to be a costly affair and lead to unprecedented delays. Thus, partnering with a consulting firm can be a cost-effective solution.

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Reference

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