Plastic product prices across multiple sectors are likely to increase from April as supply constraints of key raw materials persist amid the ongoing conflict in West Asia. The situation has disrupted supply chains, pushing input costs higher and placing significant pressure on the plastics industry.
Sharp Rise in Polymer Prices Strains Industry
In recent days, prices of polymers—primarily derived from crude oil and natural gas—have surged sharply. As a result, the plastics industry is grappling with rising costs and supply uncertainties. According to Arvind M Mehta, Chairman of the All India Plastics Manufacturers Association, polymer prices have already increased by 50–60%. While prices are expected to stabilise at current levels, the industry remains cautious about further volatility. He noted that manufacturers currently hold inventory for 15–20 days. Consequently, companies have begun passing on incremental cost increases to consumers through marginal price hikes. However, he warned that a prolonged conflict could intensify the crisis.
Supply Disruptions May Have Lasting Impact
Highlighting the uncertainty, Mehta added that many manufacturers are now accepting fresh orders only from corporate clients willing to accommodate price revisions. Furthermore, even if the conflict subsides by the end of March and supply chains normalise, its impact could linger for at least 45 days, affecting pricing and availability across the value chain.
Industry Seeks Government Support
Amid rising pressures, industry leaders are urging the government to introduce relief measures. Sunil Shah, President of AIPMA, stated that the association has submitted key recommendations to support the sector. These include increasing working capital limits by 20%, similar to measures implemented during the COVID-19 period. Additionally, the industry has requested a reduction in GST from 18% to 10% to improve liquidity and ease financial stress.
Demand Slows Across Key Sectors
Meanwhile, rising prices have already dampened demand. Industry estimates suggest a 25–30% decline in demand, particularly in sectors such as automotive, agriculture, and packaging. If the conflict continues, this slowdown could deepen further, affecting production volumes and profitability across the plastics ecosystem.
Export Strategy Gains Momentum
To counter domestic weakness, the industry is actively exploring export opportunities. Following recent free trade agreements, manufacturers are targeting new international markets to drive growth.
Currently, the global trade in finished plastic products stands at approximately $1.3 trillion, while India’s share is just $12.5 billion, or around 1%. Notably, the United States alone imports plastic products worth over $72 billion annually, presenting a significant opportunity.
As a result, Indian exporters are now focusing on nearly 20 new markets, including Mexico, France, Brazil, Italy, the Netherlands, Japan, the UK, and Belgium. This diversification strategy gained urgency after the US imposed higher tariffs on Indian goods.
Outlook: Volatility Likely to Persist
As reported by thehindubusinessline.com, the plastics industry faces a challenging near-term outlook marked by rising input costs, supply disruptions, and weakening demand. However, a strategic push toward exports and timely policy support could help mitigate the impact and stabilise growth in the coming months.
