Academic journal article Management : Journal of Contemporary Management Issues

Challenges Faced by the Indian Tinplate Packaging Industry: An Analysis

Academic journal article Management : Journal of Contemporary Management Issues

Challenges Faced by the Indian Tinplate Packaging Industry: An Analysis

Article excerpt

The New Economic Policy of 1991 opened up the Indian markets to the world. Indian manufacturers, which once operated in the protected economy, were now open to the competition from organizations world-wide. It became imperative for the organizations to develop a competitive advantage to tide over the crisis. They were quick to evolve with a restructured strategy of neo-manufacturing from simply the economies of scale to an agile organization with a higher degree of flexibility. However, soon it was realized that focusing on manufacturing alone was not enough; one needs to have an integrated approach to carry out manufacturing in line with the value delivered to consumers. Thus, evolved the concept of the value curve and formulated strategy accordingly. The paper discusses the Indian tinplate manufacturers, which once enjoyed a monopoly in the Indian tinplate market. However, the liberalization ushered in a huge euphoria and India transformed into a freight advantageous zone for the tinplate manufacturers world-wide. The drastic reduction in import duties, coupled with weak regulatory policies by the government with respect to the packaging segment, led to unscrupulous dumping of the tinplate from outside. This landed the organizations in a crisis situation. However, the organizations were quick to respond to the situation. The paper attempts to do an analysis of the Indian tinplate packaging market and tries to identify the opportunities of the future. In addition, current approach in practice is analyzed and a shift in paradigm, needed to address the changing market needs, is being suggested. Although the detailed strategic approach is beyond the scope of discussion of this paper, it still gives the readers an overview of the new approach; that is the value innovative approach of looking into the 'mind space' of the consumer.

1. INTRODUCTION

The Indian packaging industry is poised for growth. The rapidly growing GDP in India and the changed lifestyle in urban India are going to bring a boom in the packaging industry as a whole. Historical figures indicate that the packaging spend grows rapidly once the per capita income crosses the 4000 USD per annum1, as the case is evident in similar economies like Brazil where the packaging spend grew at a rate by 4% (CAGR) from 1998 to 2004 with an increase in per capita income from 6920 USD to 7480 USD during the same period1. The take-off zone for such a situation has been estimated at around 2010 in India (Ref.: Fig. 1).

The Indian economy has a similarity with that of Brazil and China. Studies reveal that in both these economies, there has been a rapid growth in the packaging segments as in Fig. 2.

The Indian packaging market is envisaging a rapid growth. The New Economic Policy of 1991 has ushered in a huge prospect in the Indian market. Liberalization has transformed the once protected economy into one of a land of opportunities for investors. In line with the WTO commitments, globalization intends to integrate the Indian economy with the world economy.

In spite of the growth in packaging spend, tinplate accounts for only a small percentage of the total packaging medium. The studies completed indicate that out of the total packaging market of rupees 35,0002, only 6 % is tinplate packaging (Fig. 3). The main reason for this is that the tinplate industry in India is under severe threat from two fronts. The first threat is from the manufacturers of tinplate from all around the world. Easy access to technology makes it an industry where the threat for entry is very easy and therefore competition. Moreover, the New Industrial Policy of 1991 and WTO triggered the lowering of tariffs on imports. This opened up the competition in the Indian tinplate industry to the world steel majors, such as Nippon Steel Japan, Sollace France, Rassel Stien Germany, US Steel, etc., who have the economies of scale. This has posed a real challenge to the Indian tinplate manufacturers who are small-scale producers when compared with the steel giants. …

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