What are the Growing opportunities in metal packaging?
Owing to the rising population, increasing income levels, changing lifestyles, increased media, and the demand for packaging is growing. Besides, it is one of the strongest growing sectors in the country. The rapid growth of the market is primarily driven by the pharmaceuticals, foods and beverages, decorative paints etc. Huge investments in the food processing, personal care, paint and pharmaceuticals, end-user industries are creating scope for expansion of the packaging market. The end-user of such product includes food, beverage, healthcare, cosmetics, personal care, paints, household care and industrial segment.
Moreover, metal packaging also provides multiple packaging options for gifting of watches, perfumes, high value products, etc. It offers semi-transparent packaging with tinplate for luxury items; also, food processing industry is on the rise with requirements for tinplate containers for packing fruit juices, cut vegetables & fruits, meat products, fish, dairy products etc.
As per retail association reports above and beyond in the current times Covid-19 is further creating more opportunities for packaging of food products for longer shelf life, sanitizers and disinfectants in aerosol cans etc..
Tell us about the emerging technologies metal packaging Industry? What will be their drivers?
Metal packaging industry in India is primarily concentrated in MSME sector. The industry is located all over the country primarily close to the filling units as the freight cost on the empty containers is quite high. However the industry also has kept in touch with the technology available in developed country through Media, participation in International exhibitions, conference etc. In order to remain competitive, compliance to various environment requirements and to supply quality packaging materials to the market there is a need for the industry to continuously work on the following areas:-
a) Adopt new technologies in can making which will enable to produce quality cans in a cost effective manner.
b) Continuous focus on innovation.
c) Adopt environment friendly technologies in the can making process.
d) Promote localization of imported components like easy open ends, peel off ends etc.
Keeping in mind that the Government is continuously tightening up the compliances of environment and the alternate packaging material are adopting latest technologies, therefore, it is important for the metal packaging industry to continuously work for improvement in order to the relevant in the packaging sector.
How does the BIS order on tin products to hit packaging industry?
The Industry is amidst of crisis owing to the Steel and steel Products Quality control Order (QCO) dated. 17th July, 2020 issued by Ministry of Steel. Govt. of India, that imposed mandatory BIS Certification on the major inputs required by the industry like tinplate/ tin free steel and also imposed restriction on various steel products like easy open ends, peel off ends etc., which the industry is importing from various countries.
The QCO has been notified at a time when the entire industry is struggling hard to reset their business during COVID time. Also, it is virtually impossible to force the international suppliers to go for BIS certifications as the procedure for getting BIS License is quite cumbersome and expensive.
For International suppliers of Tin Plates, India is a small market so they are not very much interested to get into lengthy bureaucratic and cost intensive BIS certification process.
The Foreign suppliers have therefore stopped shipping Tin plates to India and there is already a shortage in the domestic market.
Furthermore, the industry is witnessing a sharp increase in the prices of local Tin plate due to virtual monopoly of the two producers. In the quarter starting October to December, there is an increase of about 6% to 7% in the tin plate/ tin free steel prices along with another 7% to 8% announced increase from January onwards.
The industry apprehends further increase in the prices of tinplate/ tin free steel which is almost equal to 60% cost of a tin container/closure. This exorbitant price increase in tinplate,
Consequently, cans, may force our esteem customers to move away from metal Packaging to other alternate packaging options especially in food, beverage and Paint industry. The industry which is mainly concentrated in MSME will not be able to survive the hefty price increase of tinplate, loss of business to other Packaging materials and increase in working capital requirements.
How is the pandemic likely to advance innovation in this sphere? What are the learning’s from this pandemic that can be used to serve heretofore unmet needs?
Like many other industries, metal packaging industry also suffered a setback when the country wide lockdown was announced on 24th March, 2020 by Hon’ble Prime Minister. The packaging materials were included in the essential goods by Govt. of India and industry was allowed to operate. However, the industry lost production for 40 to 45 days. Metal packaging industry worked hard to reset their businesses and starting supplying to various esteem customers so that supply of essential food products are not disturbed in the market Pandemic also open some new business opportunities for the metal packaging industry like sanitizers, disinfectants etc. In order to strictly follow the safety guidelines as laid down from time to time, the industry invested into various hygienic products, monitor health parameters of its employees and resorted to work from home wherever possible. The metal packaging industry took all possible steps to provide healthy working conditions so that the employee’s health is taken care of.
Will metal consumption and demand pick up in the days to come? How will prices behave?
It can if the QCO is dropped. For example, a similar notification imposing mandatory BIS standards was brought earlier in the year 2008, 2015 and 2017 however, after considering representation from trade and industry and keeping in mind practical issues in implementation, the said notifications were withdrawn.
Also, the local producers had also filed applications with Directorate General of Trade Remedies (DGTR) for imposition of Anti-Dumping Duty on import of tinplate which was favorably considered by DGTR on 17th June, 2020. The DGTR recommended levying Anti-Dumping Duty ranging from Rs.15000 to Rs.25000 per tonnes for import of tinplate/ tin free steel etc. from select countries. The Ministry of Finance favorably considered representation of MCMA and decided to drop such recommendation; hence no Anti-Dumping Duty was imposed.
What is the government’s roadmap for boosting domestic metal demand?
Well, the industry has put forth a set of recommendations to the ministry over the concern of BIS certifications and hoping for a positive response from the policy makers since the industry is providing packaging material & packaging solutions in the form of tin container, component closures etc. to food, beverages & other household Industry. Besides edible products there is a large use of tin plates in SME industries engaged in manufacturing of lantern, stationary boxes, mosquito coil holders and so many other day-to-day low-cost utility items. Moreover, the industry provides direct and indirect employment to over 100000 people.
By withdrawing the mandatory certification the foreign suppliers will restart shipping Tin plates to India as at present there is a huge shortage in the domestic market.
When can we expect to see an upturn in the Indian metal packaging industry?
The market is already favorable when it comes to demand but much is dependent on government policies as soon as it becomes favorable we can see an optimistic growth in the Indian metal packaging industry.
Apart of BIS norms how covid has impacted the metal industry?’
COVID has impacted the industry both positively and negatively. As already mentioned, the industry lost production for almost 40-45 days inspite of the fact that packaging materials were included in the essential commodity. The industry also lost the business of various food products which were canned in the tin container to be consumed by the hotels, restaurants, and catering industry (HORECA segment) as the latter were not allowed to operate. The said business is now gradually reviving with the partial opening of restaurants, hotels etc. Industry also faced issues in terms of running the units and availability of inputs/ employees due to restrictions of movement in the containment zones. As already mentioned above certain new markets opened up for metal packaging like sanitizers, disinfectants etc., and shift of certain products from alternate packaging material to tin can, keeping in mind the safety of the product and requirement of longer shelf life.
Do you see any developments in the industry as there as there are major problems like Lack of Technology, Low Productivity & Heavy demand.
Since industry is concentrated in MSME, we are quite hopeful that with the support of the Policy makers there will be a growth in the metal packaging industry. After all tinplate demand is expected to grow at 4-6% and reach around 770-800 KT by 2024. Demand growth will be supported by robust growth in processed food and aerosol segment. Further, increasing paint consumption to also drive demand for tinplate in future.
What percentage of MSME are involved in metal packaging industry & as of now there are only two companies that have been granted the BIS certification so this is going to increase monopoly. What is your view on this?
Well, the industry is witnessing a sharp increase in the prices of Tin plate due to virtual monopoly of the two producers. In the quarter starting October to December, there is an increase of about 6% to 7% in the tin plate/ tin free steel prices along with another 7% to 8% announced increase from January onwards.
The industry apprehends further increase in the prices of tinplate/ tin free steel which is almost equal to 60% cost of a tin container/closure and the industry fears a further increase April onwards. This exorbitant price increase in tinplate, consequently cans, may force the customers to move away from metal packaging to other alternate packaging options especially in food, beverage and paint industry. The industry which is mainly concentrated in MSME will not be able to survive the hefty price increase of tinplate, loss of business to other packaging material and increase in working capital requirements.
BIS implementation is not only on metal, it is also on import of various other products like plastic, processed industry, auto wheel rims and many other products then why Metal industry is against this decision? If demand is for extension then how much extension is going to help the industry?
The resistance of the metal packaging industry against imposition of BIS is due to following reasons:-
a) There is a demand supply gap i.e. the industry needs about 7 lac tonnes of material while the domestic production is about 4.50 lac tonnes. Keeping in mind the demand and growth of about 5% the industry meets its requirement from imports and with the kind of investment it has done and employment it provides , industry’s requirement of material has to be met .
b) Industry imports both prime and non-prime materials for manufacture of tin containers/ various products for food and nonfood segments. The industry is able to use non-prime material for manufacture of tin containers for non-edible products like paints, chemicals etc. and various other products like stationery items, lantern etc. Non-prime material is an arising when the prime material is produced by the tinplate mills and is categories as non-prime due to thickness variation, surface defect etc. These materials which are commercially cheaper can be conveniently used in India where availability of labor is comparatively cost efficient and the cans/ products are manufactured either manually or in a semi-automatic process. In case of imposition of BIS such non-prime material will not be available to the metal packaging units in MSME sectors. It means that they will have to depend on the prime material which is approx. 35% expensive than the non-prime material and which is already in short supply.
c) Although demand of MCMA is for complete withdrawal of QCO, like it has been done in the past, alternatively we have sought extension till March 2022 which will give us time to explain to the Policy makers about the serious impact it will have on the industry. This will also give time to the foreign producers of tinplate and also to manufacturers of steel products to complete complex formalities for obtaining BIS license in order to supply to metal packaging industry in India.
Apart of BIS extension what are the other demand of metal industry from government in the coming year?
As mentioned above our demand to the Govt. is for complete withdrawal of QCO keeping in mind the demand supply gap both for steel and steel products. The extension of the QCO till March 2022 has been sought keeping in mind the current travel restriction due to COVID and also for the foreign producers of steel and steel products to complete the formalities in India for getting a license. In addition to this we have following demand:-
a) In order to promote localization of steel products the Government. Should setup a soft loan payable in more than 10 years for the packaging industry.
b) Since metal packaging is 100% recyclable, environment friendly and a sustainable packaging material, therefore, the Government. Should take out a scheme to incentivize the user industry for encouraging use of such packaging material.
Industry has seen severe dent in domestic demand of metals. How much time is anticipated to return to pre-pandemic levels?
If BIS certification is withdrawn it should take approx. a quarter to return to the pre- pandemic levels.