Make in India

Atit Bhatia of Hindustan Tin Works (HTW) gives an overview of the Indian marketplace.

Taking a lead from my last article in May 2014 during the Metpack issue, I spoke to you all about the transitional phase India was hoping to witness with the formation of the expected new government – and it happened! BJP won the largest democratic elections in the world and for the first time since the 1990s a single party has won with a majority vote

The situation of the manufacturing sector in India has been a cause of concern, especially when seen in comparison to the massive transformation already registered by other Asian countries in similar stages of development. Thailand’s manufacturing sector value added to GDP is 34 per cent, China 32 per cent, South Korea 31 per cent, and Indonesia 24 per cent, in comparison to India’s at 16 per cent. India is currently rated 134th out of 189 economies on the Doing Business Index 2014 by World Bank and IFC.

The Honourable Prime Minister, Shri Narendra Modi, envisions a breakthrough in the manufacturing sector. He talks about the concept of “Make in India” as a major indication of his focus to drive the manufacturing sector, and on 25 September 2014 a major campaign called “Make In India” was launched – a new international programme designed to facilitate investment, foster innovation, enhance skill development, protect intellectual property and to build best in class manufacturing infrastructure.

The highlights of ‘Make in India’ are:

  • The campaign ‘Make in India’ is aimed at making India a manufacturing hub and economic transformation in India while eliminating the unnecessary laws and regulations, making bureaucratic processes easier and shorter, and making government more transparent, responsive and accountable
  • The government emphasised upon the framework, which includes the time-bound project clearances through a single online portal, which will be further aided by the eight-member team dedicated to answering investor queries within 48 hours and addressing key issues, including labour laws, skill development and infrastructure
  • This campaign basically gives hope to the unemployed to find a decent job, if not big jobs, as manufacturing leads to the creation of lots of service sector activity. But India will have to make sure to focus on quality education rather than just skill development. It is also hoped that this is a precursor to change some labour laws that would make investing in manufacturing more attractive to Indians as well as other nations. 

Metal packaging Industry in India

In India, the three-piece tinplate market demand in 2014 was 510,000+ MTs, growing at 5 per cent per annum. The demand for raw materials (tinplate) for domestic consumption is mostly being met by the local tin mill producers TCIL (Tata) and now we have a new start up mill called Vallabh Steel and balance via imports.

Rexam Plc entered India by the formulation of a two-piece joint venture with HTW in 2006 and later Can Pack entered the Indian market to make two-piece beverage cans. The market in 2007 was only about 50 million cans and now it has crossed the one billion mark and is still growing strongly in double digits. Rexam has announced two new can plants in India.

Major can users in both the two and three-piece segments have made significant investments in India. Companies like Nestlé, Heinz, Unilever, Danone – Nutritica, Abbot, Heineken, SAB Miller, Coca-Cola, Pepsi, AkzoNobel and Kansai Nerolac paints have major growth plans in India which would drive the domestic demand further.

How can “Make In India” benefit our Industry?

We envision India in the long term to be the support system for global can makers and brand owners.

In addition to having one of the lowest cost bases in the world, India has the major advantage of being an English speaking country with no language barrier in international trade, and having a strategic location in the heart of the Asian sub continent with extremely high connectivity to all parts of the world. We have daily vessels to Europe, USA, Middle East, Africa, South America and the Far East.

Sea freight to several countries in Europe, the Far East, Middle East, China etc is fairly reasonable in terms of cost, or in some cases negligible. For example, sea freight for a 20 FCL to Dubai is USD 150, Malaysia USD 35, Singapore USD 50, China USD 150.

India shares this advantage as it has largely been an import dependent economy and has high levels of imports from several countries. The containers go back to the origin empty, hence it gives the advantage of extremely low sea freight to Indian businesses.

The successes of Indian can makers in exports is being watched closely by major industry players. For example, HTW currently exports its ends, components and printed sheets to 30 countries around the world and recently the company celebrated exports of one billion ends/components at Interpack 2014 in the presence of the metal packaging procurement chief of Nestlé Global Amanda Mattsson, who presented a trophy to HTW.

In the decorative can segment, India currently does not have the right infrastructure in place to compete at a global level, however once a leading player enters the market with the right infrastructure and a strong vision to grow, there is no doubt that India would be able to compete with the decorative can imports from China in the developed economies.

The above clearly shows that if the right investment is made in India and by creating the right infrastructure in addition to government support, which now seems to be in order, there is vast potential waiting to be untapped, whether it is ends, components, printed sheets or decorative cans. The advantages of creating such an infrastructure in India would be twofold; to meet high growth domestic consumption and to support global demand. Clearly, India in the time to come will play a key role in the global metal packaging industry.

Sustainable environment

This year’s focus for the Canvironment campaign has been working closely with the rag pickers; rag pickers are the scavengers of society who are also street side collectors of scrap and tins. They will collect these cans from streets, homes etc and pass it on to scrap collection centres which further sell the scrap to melting furnaces. Working with an NGO (Chintan) we have approached six schools for rag picker children and are providing training to six bands, who will play music on tins, scrap and drums. The children are being trained for three months by a professional trainer and finally we will host an inter-school competition.
The winning band will given due recognition and we will further help them to develop skills and promote the band so that they have an alternate way of life.

Moving ahead

India now seems to be on track with its new government, which has a strong vision to create a sustainable environment for growth. We are quite upbeat about the market in India and the transformational phase it will go through in the future. To sum up, I have taken an extract from the Honourable Prime Minister of India, Narendra Modi, who wrote in an article in the Wall Street Journal: “There is a high tide of hope for change in India. This May, across India’s immense diversity, 1.25 billion people spoke unequivocally for political stability, good governance and rapid development. India has a government with a majority in the Lok Sabha, our lower house of parliament, for the first time in 30 years. A young nation with 800 million people under age 35, India is brimming with optimism and confidence. The young people’s energy, enthusiasm and enterprise are India’s greatest strength. Unleashing those attributes is my government’s biggest mission.”

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