Is India’s glass industry broken?

By IM Staff
Published: Thursday, 27 April 2017

Low per capita glass usage has marked India out as a major potential growth market for glass minerals, but so far this projected expansion has failed to materialise. Sunder Singh, IM Correspondent, looks at how geographical concentration and pressure from imports are hampering India’s domestic glass industry.

Glass production is one of the largest markets for industrial minerals, consuming high volumes of soda ash, silica sand, limestone and dolomite. The sector is expected to remain a major end user of these minerals for the foreseeable future, as demand for all the three major sub-segments of glass products – flat glass, container glass and tableware glass, is expected to register steady growth in coming years. 

India’s glass industry has seen modest growth in the last three years, having posted double digit growth rates seen between 2004 and 2012. In the financial year 2015-2016, India’s glass sector expanded by 5.1 % year-on-year.

Often touted as one of the most promising growth markets for glass minerals due to its current low per capita usage of glass and large population, the slowdown in India’s glass market has come as a disappointment to domestic raw material suppliers.

Capacity addition and utilisation in India’s glass industry has not been commensurate to the country’s population of 1.28bn, meaning that there is still significant potential for growth.

India1  


Soda Ash

Although only the second largest raw material by mass in glass production, soda ash represents the largest cost component of all the raw materials used. As such, soda ash prices often dictate the profitability of glass producers. 

Low growth in India’s float and container glass industries in the last two years has had a negative impact on soda ash producers in the country, keeping prices low.


India’s glass industry

Demand for glass from the beverage sector, infrastructure and real estate have been the main drivers of growth in India’s glass industry over the last 10 years.

Growth has been led by the container glass segment, which accounts for majority of the sales in terms of volume, according to market research firm TechSci Research, with around two thirds of demand coming from the liquor and beer industries, with most of the remainder consumed in food and pharmaceuticals packaging. 

In value terms, float glass makes up the majority of Indian sales and is driven by the real estate sector.

The total size of India’s flat glass industry is 120,000 tpm, consisting of sales to architectural, automotive, value-added glass, mirrors and furniture, which have a market share of 45%, 15%, 15%, 10% and 15%, respectively.

Source: Glasspex, TechSci Research

New capacity additions in the domestic soda ash market, combined with large and increasing imports from China, are expected to lead to oversupply and a potential price war in the Indian soda ash industry in 2017 and most of 2018. 

Due to overcapacity in China and the slowdown in its own glass market, Chinese soda ash producers have moved into export markets, offering aggressively low prices that are especially attractive to emerging economies and have been shipping considerable volumes to India. 

Up until the end March this year, anti-dumping duties were levied on Indian imports of soda ash from some countries including China. But these tariffs have now expired and with no trade protection measures currently in place, Chinese producers are expected to ramp up soda ash exports to India.

India’s soda ash industry is concentrated in Gujarat, which accounts for about 90% of total national output. This makes transporting soda ash to glassmakers in other parts of India quite expensive.

As soda ash is a relatively cheap material, shipping the mineral over long distances adds significantly to glass production costs. Where possible, glassmakers and other soda ash users have established manufacturing bases close to soda ash sources.

Rohit Surfactants Pvt Ltd, an Indian detergent producer, is setting up a 500,000 tpa capacity soda ash manufacturing facility in Gujarat to backward integrate its operations. 

"The glass industry is very conscious of soda ash costs, as it is the most important cost component for glass manufacturing," Ashok Jain, director at Indian glassmaker Gujarat Borosil told IM.  He said that the recent weakness in soda ash prices in India has been a big relief for the country’s glass producers.

"The domestic price of soda ash is higher than it is in the international market, despite the anti-dumping duty imposed on imports," he added.

Domestic soda ash prices in India were around India rupee (INR) 19,600/tonne ($304/tonne*) in March this year, while with the country’s anti-dumping duty, imported soda ash prices were in the range of INR 18,000-18,500/tonne ($279-287/tonne). 

But since the anti-dumping duty expired on 31 March, the gap between domestic and international soda ash prices is expected to widen, as imports become much cheaper.

India2  


Silica Sand

Accounting for more than 70% of total batch composition, silica sand is the largest mineral by volume used in glassmaking.

India has large resources of silica sand, however the quality of silica sand from a number of mines is not suitable for glassmaking due to its high iron content.

India has seen a trend towards vertical integration in its silica sand sector, with number of specialised silica sand suppliers, which process sand themselves before selling it on to glassmakers, springing up in the last decade. 

As with soda ash, the state of Gujarat is the leading producer of silica sand, accounting for 39% the total production in India during the 2015-16 financial year, followed by Andhra Pradesh, at 27%; Rajasthan, at 18%; Maharashtra, at 9%; Jharkhand, at 3%; Kerala and Uttar Pradesh, with 1% each, with the remaining 2% of production coming from Karnataka and Tamil Nadu.

Since the cost of transporting silica sand from mines and processing units is often higher than the cost of the raw material itself, most of India’s largest glass producers have set up their manufacturing plants close to silica sand resources. 

Major glass producers such as Hindustan National Glass, Gujarat Guardian and France-headquartered Saint-Gobain have invested in dedicated silica sand beneficiation plants to process the material specially for their own consumption.

India3  


Feldspar

With 1.5 m tonnes of feldspar production in 2015 and reserves of 45m tonnes, India is self-sufficient in feldspar for domestic glass production. 

The states of Rajasthan and Andhra Pradesh are the largest producers of feldspar in the country, together accounting for 90% of total output. 

According to the US Geological Survey (USGS), the global glass industry consumes about 60% of worldwide feldspar production – a proportion that is reflected in India. 

More than half of the feldspar consumed by the glass industry goes to container glass. 

Globally, Turkey is the largest producer of feldspar, followed by Italy and China. India, which historically has not been among the top producers, climbed to joint fourth place with Thailand in the USGS’ global ranking last year behind Turkey, Italy and China, overtaking other key feldspar producing nations such as France, Iran and Spain.

India4  
Grinding optical glass blocks. 
Schott glass 

Dolomite

The Indian glass industry used 105,217 tonnes dolomite in the financial year 2015-16, up slightly from the 102,700 tonnes it consumed in 2014-15, according to provisional data from the Indian Bureau of Mines. 

Despite ample availability of dolomite in the country, India imports significant volumes of dolomite, due to a lack of domestic mine production.  

*Conversions made April 2017