The plastic machinery and components industry is facing one of its worst cost crises in recent years, and the impact is no longer limited to factory owners. Rising raw material prices are now beginning to affect workers, small businesses and ordinary consumers.

Indian plastics manufacturers producing components for machines, plastics packaging, piping, containers, shoe soles and consumer items are facing increased difficulty due to rising polymer costs like Polypropylene, PVC, HDPE and PET which are incorporated in almost all consumer items like bottled water, packaging material, toys, syringes, piping and furniture.

The situation for many smaller manufacturers is straightforward: rising raw material costs are outstripping customer ability to pay higher prices.

The past few weeks have witnessed a steep rise in the cost of many important plastic raw materials ranging from 50% to 70%. The rise in polypropylene price is about 70%, HDPE costs have gone up by more than 60% and for PVC it is just below 35%. Several companies have admitted that they have not faced such steep hikes so far.

It can be attributed to several factors, including higher oil prices, supply interruptions and conflicts in West Asia. Plastic raw materials are obtained using crude oil. Thus, any interruption in the supply results in increasing the cost of production. Moreover, the freight and shipping charges have gone up as well.

The most affected by the crisis is the Indian MSME segment. Almost 85% of 50,000 plastic processing facilities in India are SMEs. These SMEs operate on tight margins and lack sufficient funds to cushion themselves from price hikes. Industry projections indicate that over 50% of the smaller plastic processing facilities in some areas have been forced to shut down.

For factory workers, this is turning into an employment crisis.

In several industrial belts, there are cases where industries have cut down their working hours and either stopped working night shifts or have shut down production lines completely. This has led to a situation where daily wage labourers, machine operators, loaders, and contractual labourers are earning lesser amounts or going without income entirely. There are claims that some industries have even laid off labourers since they cannot afford to keep running the machines using the available raw materials at such inflated prices.

The effects are slowly reaching ordinary households too.

Plastic products have already become costlier in several cities. Items such as buckets, chairs, food containers, bottles, pipes, packaging materials and toys are seeing price hikes of 10% to 20%. If the current situation continues, industry experts believe the increase could become much sharper in the coming months.

This also means packaged goods may become more expensive because companies that rely on plastic packaging are paying more for bottles, wrappers, caps and containers. Sectors such as FMCG, healthcare, footwear and food delivery are already beginning to feel the pressure. Even hospitals could face shortages of disposable medical items such as syringes, IV bags and catheters if medical-grade plastic prices continue to rise.

For now, many manufacturers are hoping for government support in the form of cheaper imports, easier access to raw materials and steps to prevent hoarding in the market.

But if raw material prices continue to remain high, the plastic machinery and parts industry may face a deeper crisis in the coming months, one that could affect not only factories and workers, but also the prices that ordinary people pay every day for basic goods.

The biggest reason behind this crisis is the sharp rise in crude oil prices.

Most plastic raw materials such as polypropylene, PVC, HDPE and PET are made from crude oil and petrochemicals. When crude oil becomes expensive, the cost of making plastic also rises.

The recent conflict in West Asia has disrupted global oil and petrochemical supply chains. There are concerns over shipping routes such as the Strait of Hormuz, through which a large part of the world’s oil supply moves. Even the fear of disruption has pushed oil prices higher.

Apart from crude oil, freight and shipping costs have also increased. Many companies are paying more to import raw materials because vessel availability has reduced and shipping routes have become more expensive. A weaker rupee has made imports even costlier for Indian manufacturers.

Another major issue is supply shortages and hoarding. Some traders and distributors are reportedly holding back stock in anticipation of further price increases. This is reducing availability in the market and pushing prices even higher.

The crisis is also being worsened by India’s dependence on imported crude oil and petrochemicals. Since India imports a large share of its oil requirements, any global disruption quickly affects domestic industries such as plastics, packaging, textiles, tyres and chemicals.