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Indian Label Industry - Cautious, but still growing

Indian Label Industry - Cautious, but still growing, Weldon Celloplast Limited, Asia packaging, India
The Indian Label Industry is registering almost double-digit growth, and companies are still aggressively expanding. Harveer Sahni, Managing Director of Weldon Celloplast Limited, discusses this in his special commentary piece.

I have always been of the opinion that there is no such thing as stagnation in an industrial enterprise, more so in the Indian label industry. There is either growth or recession. Anything that stagnates starts to deteriorate. Growth or change is inevitable and an imperative part of any enterprise.

Fortunately for a country like India with a large and growing young population achieving increasing literacy levels, the demand for consumer products will continue to grow steadily. This growth in consumerism is obviously expected to stimulate the already growing organized retail; this may witness exponential expansion of the retail sector if FDI in multi-brand retail begins to happen. All this will definitely drive growth in demand for labels.

The industry maybe facing momentary slowdown due to circumstantial situation, but on a year-on-year basis the Label industry continues to register a near double digit growth.

The slowdown in the manufacturing sector is expected to end and the economy is slated to look up once a new stable government takes charge at the centre after general elections. India has no dearth of investors who drive growth in an industry that registers automatic growth consistently.  Apart from expansion by existing companies, new entrepreneurs are also entering all growing industrial segments.

Expansion in India’s label printing sector

There are at least three types of expansion initiatives in the Indian Label Printing Industry. First, it is the existing printers who, in response to the need of their natural growth, have to invest in new capacities.

Secondly, it is the commercial offset printers facing slowdown due to the impact of Internet publishing, who are expanding into the booming label industry. And lastly, it is the new investors who are flush with funds, maybe due to some real estate deals, who have no knowledge of printing but on hearsay or with prospective partners, make investments in Label presses.

"The Indian label industry is moving ahead with caution, to achieve growth and cater to the market that still has a lot of potential."

With investments growing in an unregulated environment, it is likely that there is creation of excess capacities. The pressures to break even for the new entrants into the industry escalates and they start making desperate sales, bringing down prices and putting margins under pressure. This creates difficulty for existing established printers.

As a result, we find printers complaining of a slowdown and difficult situations arising out of haphazard capacity growth. Despite such situation the label market has over the years segmented substantially and each segment has individually started to branch into their fields and register growth to contribute to a situation such that when we review it on a national level, the label industry shows up definite growth both in capacity and investments. However due to reasons explained herein, the industry is cautious but still growing.

Factors impacting on India’s label industry

The Indian label industry would have ended 2013 on a very positive note and registered higher investments and growth rate but for the exchange rates having played the spoil sport.

Before the Labelexpo Europe last year, all looked very good but when the Rupee fell by almost 15% making equipment costlier, label printers put purchases on hold and also many of them put off their trip to Brussels.

Another factor that has been responsible for slower growth is the political unstability of the central government facing the nuances of coalition politics. In addition, FDIs going on hold in anticipation of stability after the general elections this year has impacted the economy adversely.

That said, the Indian label industry is moving ahead with caution, to achieve growth and cater to the market that still has a lot of potential.

Indian Label Industry - Cautious, but still growing, Weldon Celloplast Limited, Asia packaging, India
Article contributed by Harveer Sahni, Managing Director of Weldon Celloplast Limited in New Delhi, India.

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