With the third-largest economy in Asia, India has become fertile ground for companies considering future investments, as this developing BRIC (Brazil, Russia, India, China) nation offers obvious potential as an emerging market for hygiene, medical and other products.
 
According to statistics from the U.S. Central Intelligence Agency (CIA), Gross Domestic Product (GDP) at purchasing power parity (PPP) exchange rates was $4.4 trillion for 2011. This figure is projected to reach $7 trillion in 2016, growing 10% per year from 2011-2016. “Economic liberalization, including industrial deregulation, privatization of state-owned enterprises and reduced controls on foreign trade and investment, began in the early 1990s and have served to accelerate the country’s growth, which has averaged more than 7% per year since 1997,” according to the CIA World Factbook.
 
However, the Indian landscape has encountered some rough patches recently, despite rebounding from the global financial crisis. The country’s economic growth in 2011 slowed due to persistently high inflation and interest rates, as well as stalled economic reforms. According to the CIA, “high international crude prices have exacerbated the government’s fuel subsidy expenditures contributing to a higher fiscal deficit, and a worsening current account deficit.”
 
While a young population and healthy savings and investment rates, along with increasing integration into the global economy offer a positive medium-term growth outlook, many long-term challenges persist.
 
For example, the country will be forced to deal with widespread poverty, inadequate physical and social infrastructure, limited non-agricultural employment opportunities, scarce access to quality basic and higher education and accommodating rural-to-urban migration.
 
“The Indian Market looked poised for growth in 2003 while we were there,” says Rory Holmes, president, INDA, association of the nonwoven fabrics industry. “Unfortunately, it has not grown as quickly as we thought. Their economy is growing in GDP but the rupee is down versus the dollar. That reduction will make imports more expensive.”
 
Perhaps realizing the need for locally produced goods in the region—and shifting from its strategy of premium imports—Procter & Gamble (P&G), the world’s largest consumer products maker, announced late last year that it plans to manufacture products locally for the Indian market in order to offer more affordable products to a growing population.
 
Poverty and lack of distribution channels, especially at retail, are holding the Indian economy back, says Holmes, noting a wide gap between the rich and poor. While the central government has offered a 10% rebate on capital investments, also paying 5% of the interest on any loan for capital equipment, these incentives still don’t seem to have drawn many investors in nonwoven technology, he adds.
 
“INDA has volunteered to be the technical consultant for the Center of Excellence for Nonwovens and Technical Textiles in India. Through our partners at TechniTex Nonwovens, we offer a training course that is quite popular. Additional events are in the discussion stage,” Holmes continues.
 
INDA has a number of member companies that are based in or have production facilities in India, notes Holmes. These include Ginni Filaments, Ahlstrom, A2Z Filtration Specialities Pvt. Ltd., Birla Cellulose, Tulip Fabrics Private Limited and Welspun Global Brands Limited.
 
EDANA, the International Association representing the Nonwovens and Related Industries together with Business Co-Ordination House (BCH), has also recently announced training courses on Nonwovens and Absorbent Hygiene Products, scheduled for March 7-9, 2013 in New Delhi, India. The courses are intended for both technical and marketing personnel, with or without knowledge of the nonwovens industry. Led by Jean-Michel Anspach, technical and education director at EDANA, the courses offer people from all areas of the supply chain to gain understanding of technologies, processes, raw materials and market aspects of nonwovens and absorbent hygiene products.
 
Market Share
 
In 2011, India represented 6% of the Asian nonwovens market (2.6 million tons), according to estimates from the Asia Nonwoven Fabrics Association (ANFA), which projected this figure to remain at 6% in 2016. With a population of more than 1.2 billion, India presents potential opportunities in many markets, from hygiene to automotive and filtration.
 
As for recent investments, Global Nonwovens Ltd. announced in late June that it has finalized plans to add a large-scale spunmelt line in Nashik, India that will target hygiene and medical applications. With an initial capacity of 20,000 metric tons, the line is expected to come onstream in 2014. This investment represents the first significant spunmelt line in India and executives at Global Nonwovens say the site is being designed to accommodate future expansions.
 
Precot Meridian Ltd., a manufacturer of yarn and fabrics, is establishing a nonwovens operation in the southern state of Karnataka, India, to manufacture hygiene care products. Looking to become an important player in the cosmetic pad market, Precot partnered with VMI Holland BV, which will supply several of it’s new ACE 300, fully automatic and compact pad production and packing machines, as well as an HCI high output machine, to the new venture.
 
According to Ashok Kulkarni, Precot’s, CEO of the new division, this greenfield project will be an integrated plant, with processing, nonwovens lines and finishing machines. Precot will begin trial production of cotton pads in January 2013.
 
As for potential in other markets, India is the world’s second largest producer of textiles and clothing, after China. Holmes says there has been great interest in technical textiles, including medical fabrics.
 
The textile and clothing industry forms a major part of India’s manufacturing sector and has contributed significantly to the country’s impressive economic development in recent years, according to a report published in July by Textiles Intelligence titled “Prospects for the Textile and Clothing Industry in India.”
 
According to the report, “India has a huge and growing domestic market which is expected to be worth $140 billion in 2020 as the population increases in size and consumers become wealthier. This huge growth could provide significant opportunities for foreign exporters to India and potential foreign investors in the country, as well as for the Indian textile and clothing industry itself.”
 
Filtering through Opportunities
 
Recognizing considerable opportunities in the medical market, Ahlstrom established a manufacturing platform in India in 2010 with a state-of-the-art medical nonwovens production facility in Mundra.
 
The plant produces a broad range of single-use protective fabrics specifically developed for the medical market. These materials are used in hospitals for surgical drapes and gowns to protect patients and staff from infections, according to Ahlstrom, a leading developer and manufacturer of nonwovens.
 
David von Loesecke, vice president International, Hollingsworth & Vose (H&V), predicts the filtration market in India will continue to grow at a faster clip than the general economy. “Despite the much publicized slowdown of the Indian economy, we still see higher growth in the filtration area. While still an extremely price sensitive market with less sophisticated designs than in the U.S., Europe or Japan, we feel that the market will gradually require more performance based products.”
 
H&V is currently developing an operating capability in India that will begin with the production of engine filter media, he adds.
 
“The heavy-duty and automotive engine filtration markets are the most mature of the markets for nonwovens that H&V serves. The automotive sector is characterized by small engine requirements for a large and fast-growing population of sub-compact cars and two- and three-wheelers. The heavy-duty sector is driven by the presence of western multinational companies producing construction equipment and trucks where filter designs are more advanced than passenger cars.”
 
High efficiency and battery separator markets are less developed and significantly smaller than engine filtration. However, as the Indian economy advances, driving need for new clean air standards and longer lasting battery requirements, demand in these markets is expected to increase, von Loesecke predicts.
 
Also positioning itself for future growth in the filtration sector, Freudenberg Filtration Technologies India Private Limited signed an agreement in May of this year to acquire the business of Pyramid Filters Private Limited. Based in Pune, Freudenberg Filtration Technologies India provides high-efficient industrial and automotive filter elements and systems, as well as globally patented system solutions for capacity and efficiency enhancement in gas turbines and compressors. Pyramid Filters develops and produces air filter elements and systems for cleanroom applications in the pharmaceutical, medical, food and chemical industries.
 
At the time of the acquisition, Andreas Kreuter, managing director of the global Freudenberg Filtration Technologies Group, said, “Founded in 1998, Pyramid Filters enjoys an excellent reputation in India, thanks to a comprehensive HEPA filter range and renowned services. Based on Pyramid’s strong market position, we will be able to add new products to our already broad portfolio and offer our customers further services.”
 
India faces high expectations for the future. With a growing economy that will likely empower an emerging middle class, the potential return on investment seems attractive within various nonwovens market segments.