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The Indian label industry is complex, dynamic and fast growing.

Although per capita


consumption of labels in India is the lowest in any analysed region, it also has the highest
growth rate in the world at 19%. In India, wet glue labels although still growing in double
digits, are fast making way for pressure sensitive and flexible film labels. Bar-coded labels
are growing by 30-35% in India, but are making way for smart RFID labels in Europe and
USA. Narrow web flexo and combination presses are growing in India as compared with
growth of digital label presses in the advanced countries.
Global growth trends are estimated variously from 5% by Gallus to 7% by Fredonia from
2000-2005. As per Ippstar Printing Industry Survey, world label production growth is
estimated in sq.mtrs. at 8% from 2000-2005 and 8.5% from 2005-2010. These estimates are
based on the continued increase of wet glue labels in rapidly growing Asian markets and the
more rapid growths of both pressure sensitive and flexible labels.

Ippstar expects Asia Pacific’s share to rise from 34% in 2000-2001 to 38% in 2004-05 and to
45% in 2009-2010, despite being held down by Japan’s growth of around 3%. China and
India will lead the increase in Asia’s label production share with China achieving 12.6% of
world label production and India achieving 6.3% of world production of all types of labels in
2009-2010 in sq mtrs.
Rate of label production in sq.mtrs. is rising faster in India than China. In 2002-03, India's
production of labels in sq.mtrs. was just above 30% that of China, and is expecte dto increase
to 50% of China's prodcution by 2009-10. . However, the gap between Chinese and Indian
label production will increase to 3 bln sq.mtrs. by then. The only way that Indian label
manufacturers can surpass China is in value- by the production of very high value labels that
are directly exported, and by rapid adoption and market leadership in smart and RFID labels
where they will have to take on or partner the Americans.
Each segment of the printing industry is fragmented, and contains organised and small and
disorganised players. And although the industry as a whole is growing at more than twice the
GDP growth rate, the packaging industry contains a larger number of organised players than
almost any other segment other than publishers. Packaging growth in India has grown from
26% of the printing industries in 1999 to about 34% of the total turnover of the industry. In
2002-2003, the packaging industry in India which includes glass, metal and plastic rigid and
semi-rigid packaging, flexible, corrugated, and board packaging, was valued at Rs.18,000
crore (approx US$ 4 bln). Within the packaging segment, flexible packaging outstrips growth
of board and other kinds of packaging but the fastest growth in the segment comes from all
kinds of labels.

The geographic distribution of most segments using labels is 31% in the North, 28% in the
West, 26% in the South and 15% in the East. Production of labels is still highest in the West,
but label manufacturers in both the South and the North are adding capacity and gaining
ground. Western India with its strong textile, engineering and FMCG manufacturing base has
the largest packaging and label industry as well. The region is adding the highest number of
sophisticated narrow web label presses and it has the most number of organised label
manufacturers. It also has the largest number of label exporters. Size of the label industry
including wet glue, pressure sensitive (including holograms), flexible and wraparound labels
in 02-03 was Rs. 1842 crore, with growth trends of 11 to 25% with an average growth rate -
slightly more than 19% to 2009-2010. By 2009-2010 the Indian label industry is forecast to
reach Rs. 6400 crore (US$ 1.4 bln).
Within pressure sensitive labels, the use of transparent and filmic labels is the hot segment.
However the fastest growing flexible label segment consists of wraparound and shrink-wrap
labels. Shrink-wrap labels are most popular in the Indian packaging market as FMCG
manufacturers use them to cover irregular shaped rigid containers. Flexible labels printed by
gravure and flexography are increasing at more than 25% pa from a small base of Rs 68 crore
in 02-03 to at least 324 crore in 09-10. Wet glue will decline in India to about 30% of label
production by value in 2009-10, while pressure sensitive labels will rise to 65% and flexible
labels will go from less than 4% to more than 5%. The growth of flexible could be higher
because of the increased use of multicolor wrap-around labels but similarly the growth of
pressure sensitive labels will be enhanced by the increasing value of smart labels. Flexible
packaging will continue to erode the share of rigid containers with labels, as seen in the food
processing sector. In this sector there has been an introduction of in-mould labeling as well
but it is too small to enumerate at this point.
Consumption of pressure sensitive label stock in India should rise from 266 mln sq.mtrs. in
02-03 to 1.3 bln sq.mtrs. in 2009-10 with a growth rate close to 20%. What is significant in
this growth trend projection is that in sq.mtrs. India will triple its market share from 1.8% of
the world’s pressure sensitive labels in 02-03, to 5.3% in 2009-10. The label industry has now
reached the inflection point for moderately high growth on a small base, and with this kind of
capacity creation one can expect a CAGR of at least 19% over several years. There is also the
opportunity and the need to aim for 25% growth because this industry is still small and
because it can be technology and export driven.
Wet glue has been dominant in India because of its obvious ease of production and simplicity
in application. Nevertheless wet glue labels although huge in quantity and with continued
double-digit growth were overtaken in value (but not in quantity) by pressure sensitive labels
in 2003-04. On the other hand the flexible shrink and wraparound labels are the highest
growth segment of the label industry (more than 24-25%) but this growth is on a small base.
Modern consumer product marketing believes that the product packaging and the label have
to be attractive enough to sell the product on their own. This requires the high value addition
that is associated with the pressure sensitive segment and especially its new varieties such as
clear see-through pressure sensitive and in some case with shrink-wrap labels. It is estimated
that flexible labels, pressure sensitive and wraparound and shrink-wrap labels, will rapidly
take away market share from paper-based labels.
Three important growth segments of the economy for packaging are the food and beverage
industry, the pharmaceutical industry and the textile and apparel industry. The total food
market in India was Rs. 3,30,000 crore or US$71.7 bln in 2003. Out of this figure Rs 80,000
crore (US$17.4 bln) consisted of processed or value added food products. The Indian
pharmaceutical industry in 2002-2003 was of the order of Rs 26,000 crore (US$5.7 bln). The
apparel industry in India was Rs. 128,800 crore (US$ 28 bln). The entire Indian FMCG
market is Rs 60,000 crore which is (US$13 bln). Out of the Rs. 128,800 crore (US$28 bln)
apparel industries, the organised retail component is about Rs. 9,000 crore or less than US$2
bln, in addition to the US$13 bln textile exports. These are evenly divided between apparel
and textile made-ups. This industry consumes about 2.5% of its costs in packaging, about
US$325 mln or only Rs. 1,495 crore. Half of this is spent is spent on printed polybags and
shipping materials including cartons and the remaining 50% is spent on labels and tags. The
label component is in fact 10% with the remaining 40% for tags. Thus one can estimate that
labels get only Rs. 149 crore out of this expenditure with tags getting Rs. 700 crore. Thus far
only half the garment and textile exports require bar coded labels. Apart from organised retail
there is a large consumption of labels and packaging by segments such as sarees and textiles
that may or may not be sold through organised retail. Pressure sensitive labels are used so
extensively for these products that Gujarat, a traditional textile manufacturing state, also has a
large number of label printers as well as coating machines that produce pressure sensitive
label stock.
The Rs. 26,200 crore (in 2001-02) pharmaceutical industry is more packaging intensive than
others and spends about 4.4% (Rs. 1152 crore) of its turnover on packaging. However a great
portion of this is used for plastic and glass rigid containers (35%), foil and plastic blister
packs (20%), cartons (25%) and corrugated shipping cartons (11.5%). Labels consumption is
only 5% (Rs. 57 crore) of the total packaging budget. The Rs. 80,000 crore processed and
value added food industry used the highest variety of packaging from rigid metal and glass to
cloth, paperboard, film and foil. The overall packaging expenditure is 5% at Rs. 4000 crore.
Of this self-adhesive labels are used extensively on metal, plastic, glass containers. Flexible
shrink-wrap labels are also used on processed food products. Estimating the label component
at 5% of the total packaging budget this would come to Rs. 200 crore
There are many tiny hurdles that hinder the growth of the label industry. The first is that the
printing industry as a whole has been disorganised and fragmented, lacking investment in
specialised components and tools. There is a dearth of technology developments, research
and development, standardisation, testing and certifying, training facilities. Environment,
health, safety, and best practices are also issues that need to be addressed if the industry is to
address the needs of its customers. Foreign direct investment and organised retail growth are
seen as the drivers for the packaging and label industry as well.