Cleaning up the Indian label industry

The move, targeted at cracking down the black market in the country, reducing corruption and dealing with terror strikes, while also empowering the poor as well as honest service and business people, has largely been well received.

As a result of this move, however, the stock market benchmark BSE (Bombay Stock Exchange) in India crashed almost 1,689 points; real estate prices saw a correction of between 20 and 30 percent and gold prices shot up overnight. A lot of businesses have been greatly affected. The Indian label industry hasn’t stayed untouched either. Labels & Labeling spoke to a few machine suppliers, manufacturers, and converters to understand how the announcement affects the industry at large.

‘It is a great move in long run but the industry will see a massive slow down in the next six to eight months,' commented one supplier. 'As the consumer reduces consumption, the requirement of labels will go down and it will indirectly affect the sales of label presses as well. Luxury market will be badly hit. I don’t think the menace of black money will not get over but it will definitely come down.’

‘I welcome the announcement as it is in favor of the progress of the country. There is cash crunch for a few weeks but it will have good long-term impact. A lot of people who deal in black money to save tax and get the print job by reducing the selling price of the labels won’t be able to do it at a large scale. Thus, improving the industry health in long run,’ said one of the suppliers.

A fellow Indian supplier echoes the same sentiment, seeing that, ‘it will become a level playing field.

‘The announcement does not affect organized players as much as it does the unorganized sector. The small and medium businesses will be forced to be more professional as they won’t have the same margins that they used to. Industry needed a shake up to get their act straight. With Goods & Services Tax (GST) to also come into effect from the next fiscal, I expect to see a more organized and professional Indian label industry in 2017.’

A machine manufacturer added that the implementation of GST from April 2017, and the ban on old currency notes of Rs 500 and Rs 1000, ‘is a big deterrent to regeneration of black money. Stacks of money that was lying idle in the market will now go to the banks. Banks will now have more money to lend and the interest rates should come down so the move will benefit the Indian label industry.’

One of the raw material manufacturers commented: ‘The announcement will officially increase the gross domestic product (GDP) of the country and will provide good impetus to the growth of the economy as well as the Indian label industry. With the growth of the organized sector, the packaging industry will get a boost that will have a positive effect in the long term on the label industry as well.’

A printer in North India predicts that the market will see a slump in the next few weeks. ‘Big and medium sized companies that mostly generate bills for print jobs won’t be affected as much.’

‘It is the coolest that could have happened and I am very happy with the move,’ added another printer. ‘Those who have not done the business the right way are suffering right now. It will eventually clean up the label industry and pave the path for better growth.’

A further printer, from West India, commented: 'The business has slowed down because our clients are unable to pay us due to demonetization and cash crunch. I feel the slump will continue for a couple of more months and then it will start recovering. I am sure that the Indian government will take steps to further curb the growth of black market in the country. It is a very positiev step for the growth of the country in the long run.'

‘This was a necessary step in the interest of fortifying our economy,’ opined a machine manufacturer, also in West India. ‘People will face temporary hardships till the new notes come in ample circulation. I fully support this step taken by the Government in sweeping out the accumulated dirt in our economy. I also opine that the Government should follow this with stringent monitoring and bring about an environment that will discourage people from cheating on taxes and take stringent action on those who do.’

A further supplier described the move as ‘a bold step’.

‘The country needed it at this point.’

‘This announcement has stunned every home,’ comments a final supplier. ‘There are hidden problems and people are suffering in short run. It may be good in long run but small printers will face more problems. It is the government that wants most bribes so the need of the hour is to stop corruption at all level.’

With mostly positive reactions to the government’s announcement, the Indian label industry is set for a large scale financial clean-up.