India’s regulatory landscape for plastic management has undergone a transformation, with the Ministry of Environment, Forest and Climate Change implementing stringent Extended Producer Responsibility (EPR) norms as part of the Plastic Waste Management (PWM) Rules. These guidelines impose obligations on producers, importers, and brand owners (PIBOs) to ensure recycling, end-of-life disposal, and integration of recycled content into plastic packaging.
Among all plastic types, the PET bottle industry is poised for the greatest disruption, supported by high collection efficiency, established mechanical recycling procedures, and timely FSSAI approvals for B2B -grade recycled PET (rPET). Starting April 1, 2025, all PET packaging must include a minimum of 30% recycled content, increasing to 60% by FY30. This is likely to open a 4 lakh MTPA market by FY26, scaling to 10–12 lakh MTPA by FY30, assuming past growth trends and government targets. This translates into a potential ₹15,000 crore ($1.8 billion) opportunity.
While the opportunity is large, the industry faces significant challenges. We believe that there will be a 20%+ capacity shortfall by March 2025 due to the lead times for machinery procurement and operational stabilization. Starlinger and Erema, the leading suppliers of PET recycling systems, have large backlogs, and bottle collection remains dominated by informal networks. Only a few players possess deep sourcing networks, high-quality washing capabilities, and relationships with consumer brands which require high-grade rPET consistently.
Mastering these quality standards demands not only technical expertise but also substantial investments in infrastructure and operational know-how. Furthermore, consumer brands increasingly seek traceability and adherence to stringent quality benchmarks, adding another layer of complexity for new entrants.
As the market evolves, players with a deep sourcing network, advanced machinery, and established brand partnerships will emerge as leaders in India’s sustainable packaging revolution in our view.
Rigid PET market in India
India consumes approximately 1.2 million tons of PET bottles annually, a figure projected to grow at an 8% CAGR to 1.9-2.0 million tons by 2030.
Carbonated soft drinks and packaged drinking water drive 45-50% of India’s PET bottle consumption. Coca-cola and Pepsi control 70%+ of these two segments and hence account for 30-35% of India’s PET bottle consumption
The current state of PET recycling in India
India has a well-established ecosystem for recycling PET bottles into recycled polyester staple fiber (RPSF), which is widely used in textiles. This ecosystem relies on millions of ragpickers, thousands of traders and aggregators, and over 40 recycling units. India’s PET bottle recycling rate is estimated to be 90%+ (including organized and unorganized recycling as well as household reuse), placing it significantly ahead of many developed countries.
Despite this high recycling rate, challenges persist. While the country has over 40 RPSF manufacturing units with an installed capacity exceeding 1.1 million tons, only around 600,000 tons of capacity is currently operational. This discrepancy is primarily due to financial strain among smaller players. These operational challenges have forced traders and aggregators to prefer dealing with larger, financially stable manufacturers who, despite offering slightly lower prices, guarantee payment security.
Leading RPSF manufacturers include Ganesha Ecosphere (109k MT), JB Ecotex (60k MT), BLS Ecotech (55k MT), Pashupati Polytex (54k MT), Srichakra and Reliance partnership (~50k MT), Sulochana (~50k MT), Sutlej Textiles (~44k MT), RWSM Group (~43k MT), Mahalakshmi Spintex (42k MT), Aqua Fiber (40k MT), and Shiva Group.
Background of PWM Rules and EPR Norms
Initially introduced in 2011, the PWM Rules sought to establish a foundation for plastic waste collection, segregation, and disposal. Over the years, revisions in 2016 and subsequent amendments have progressively added stricter guidelines to tackle the growing plastic waste crisis.
In 2016, the amendments to the PWM Rules emphasized source segregation, extended responsibility for plastic waste on municipal authorities, and restricted the use of non-recyclable, multi-layered plastic packaging. The 2021 revision incorporated even more stringent measures, mandating that producers and brand owners become accountable for the collection and recycling of plastic waste generated from their products. With the introduction of Extended Producer Responsibility (EPR) in 2022, the focus has shifted decisively towards promoting recycled content, aligning with India’s commitment to sustainable practices and circular economy principles.
Under these norms, producers, importers, and brand owners are mandated to take responsibility for the end-of-life management of their plastic packaging. This responsibility includes not only the collection and recycling of plastic waste but also the gradual integration of recycled materials into their products.
The EPR norms are categorized based on the type of plastic packaging—rigid, flexible, and multilayer with distinct requirements for recycled content that increase progressively over time. Below is a breakdown of the obligations across these categories:
These requirements apply to:
• Producers of plastic packaging
• Importers of plastic packaging or packaged goods
• Brand owners, excluding Micro, Small, and Medium Enterprises (MSMEs)
• Plastic waste processors
Flexible packaging, commonly used for consumer goods packaging, has a more conservative target starting at 10%, given the technical and economic challenges in recycling these materials. Multilayer packaging, typically used for complex food and consumer goods packaging, has the lowest target due to inherent difficulties in its recycling process.
Implications for the Industry
These norms are set to open a large market of B2B-grade recycled PET (rPET) in India. In FY26, requirement for B2B-grade rPET is projected to be around 400,000 MT. As India’s PET bottle consumption and EPR targets increase, the B2B rPET demand will surpass 1.1 MTPA by FY30. At current price levels of around ₹ 110/kg and assuming price hikes in line with CPI, B2B rPET market could exceed INR 15,000 crore by 2030 if these capacities and market needs are adequately met.
While the projected demand offers immense opportunities, it also presents challenges, particularly in terms of bridging the anticipated demand-supply gap. India’s PET recycling industry must scale rapidly to meet these targets, which will require significant investment in recycling infrastructure, sourcing networks, and operational expertise.
In the near terms, the industry faces considerable capacity constraints in scaling up to meet EPR requirements. The operational capacity of B2B rPET is projected to reach only about 300,000 tons by
March 20254, potentially leaving a deficit against projected demand. Additionally, there are significant lead times involved in stabilizing plant operations and getting approvals from users like CSD & FMCG brands. Although there are plans to add an additional 3.3 million tons of capacity between April 2025 and March 2026, this timeline may face challenges.
Key players, such as Ganesha Ecosphere, Srichakra Polyplast are leading the charge with capacity expansions. Additionally, as shown in the capacity data, several new players from various sectors, including virgin PET producers, RPSF manufacturers, and bottlers, are entering the space. However, their inexperience in recycling processes could hinder their ability to fully operationalize within the expected timelines.
As these incumbents and new players compete, existing RPSF players will face challenges in securing their supply of bottles. As a result, these companies, who previously focused on converting PET waste into textile fibres, are also now eyeing the B2B rPET market.
Supply Chain Dynamics: Where Does Value Lie?
India’s PET recycling ecosystem has traditionally depended on an informal network of collectors, traders, and recyclers to process PET waste into downstream products. However, the rise of B2B rPET demand is set to fundamentally reshape the supply chain. The shift will bring value migration and a re-evaluation of roles, as brand owners increasingly seek traceable, high-quality recycled content. Below, we summarizethe roles of various players and their evolving dynamics in this ecosystem.
Collectors
Bottle collection remains the backbone of India’s PET recycling network, primarily managed by ragpickers and small aggregators. While they ensure the flow of raw PET waste into the system, their role is constrained by limited capital, informal operations, and the absence of scalable infrastructure. As B2B rPET demand rises, collectors may find themselves squeezed unless formalization efforts or direct support from large recyclers increase their participation in the value chain.
Traders
Traders have historically been the intermediaries, aggregating and distributing bottles to recyclers. The surge in B2B demand positions traders to benefit from supply-demand mismatches, allowing them to negotiate favorable terms with recyclers.
B2B recyclers
Recyclers are expected to capture the most value in the evolving ecosystem. Their ability to manage sourcing networks, operational efficiencies, and stringent quality standards will be crucial. The shift from textile-grade recycled fiber to food-grade rPET brings opportunities to command higher margins, but it also demands significant capital investment and technical expertise.
Existing RPSF players
This shift puts RPSF-focused players under pressure. Bottles that previously fed textile-grade recyclers are now being channelled toward high-value B2B rPET production. Since B2B rPET commands significantly higher margins, traders and collectors are incentivized to redirect feedstock to recyclers focused on food-grade applications. RPSF players, who have traditionally operated on thin margins, face the risk of raw material shortages and rising input costs, making it harder for them to compete.
Brand owners
Brand owners, particularly those in FMCG and beverages, are under pressure to meet EPR mandates and demonstrate sustainability commitments. This creates a compelling need for partnerships with established recyclers who can deliver consistent, high-quality rPET while ensuring traceability and compliance. For brand owners, this shift also highlights the importance of securing long-term agreements with recyclers to mitigate supply risks and stabilize input costs.
What differentiates recyclers
To capture value, recyclers must excel in three critical areas:
1. Sourcing Network
Establishing and maintaining a reliable sourcing network is a complex and resource-intensive endeavor. Beyond bottle aggregation, it requires building strong relationships with collectors and traders, offering competitive payment terms, and ensuring timely servicing to maintain trust and supply continuity. Players with extensive networks are better positioned to manage costs and avoid bottlenecks, especially as bottle prices fluctuate with demand.
2. Washing Efficiency
The efficiency of the washing process not only determines product quality but also has a significant impact on cost structures. High-end washing lines like those from Sorema achieve superior decontamination and impurity removal but come with a higher upfront cost compared to more affordable alternatives. With yields as a key metric, recyclers must optimize every stage of the washing process to maximize production output and reduce waste. Currently, only a handful of Indian recyclers have adopted such advanced washing systems, which are becoming a nonnegotiable standard for leading Fast Moving Consumer Goods (FMCG) and Carbonated Soft Drinks (CSD) brands
3. Machinery Choices and Operational Efficiencie
Beyond washing lines, recyclers rely on advanced recycling machinery from manufacturers like Starlinger and Erema to ensure high-quality rPET production. Recyclers must focus on optimizing overall process flows—from automated sorting to pelletizing—to lower operational costs and enhance product consistency. By minimizing reliance on manual labor and investing in automation, recyclers can improve margins and scale operations efficiently.
In our opinion, large recyclers who have established deep sourcing networks, invested in high-quality
washing lines and have long-standing relationships with potential users such as top CSD and FMCG firms would stand out as clear winners beyond the next three years.
Economics of running a B2B rPET business
As the industry is nascent, steady-state economics of running a B2B rPET business are not yet clear. In our view, earning ~18% pre-tax ROIC is possible for efficient players.
A typical 14,000 MT Starlinger line can generate revenue of ~₹115-170 crore on a ₹115 crore capex
investment (incl. the washing line), assuming ~80% utilization and current rPET prices of ~₹110/kg. EBITDA margins are typically around 20% and vary between 15% to 22% depending on end-consumer profile, quality of material and location of plants (due to govt subsidies and incentives). Larger players are also able to maintain a working capital cycle of 40-50 days, leading to pre-tax ROICs of 17-18%.
Scalability, achieved via integrated operations and automation, further reduces per-unit costs and strengthens returns. Ultimately, recyclers that combine these operational efficiencies with robust customer relationships and a focus on quality will emerge as leaders, delivering the required profitability and positioning themselves competitively in a growing market.
Challenges and Risks in the Industry
Sourcing Challenge: Demand of PET bottles might outstrip supply
As discussed previously, India’s total PET bottle and rPET demand are expected to cross 1.9 million tons and 1.1 million tons respectively by FY30. At present, 1 kg of bottles collected yield only 650 gm food grade rPET. Hence, India would need ~1.8 million tons of bottles will be required to satisfy the regulatory rPET demand. This implies almost every used PET bottle being redirected to rPET recyclers.
Smaller players, who control a significant share of the PET bottle collection market, may find it lucrative to channel more material towards high-value B2B rPET players, potentially driving up costs for RPSF producers.
Commercialization Risks
As discussed earlier, merely installing machines isn’t enough. It takes anywhere from 6-12 months to stringently test product quality, stabilize plant operations and get enrolled with FMCG brands.
Potential competition in the medium-term
If more players (beyond the ones who have already made announcements) enter the market, there might be a supply glut over the next 18-24 months, leading to lower utilization levels and worsening economics.
Regulatory uncertainty
Central Pollution Control Board – the regulatory body, has remained steadfast despite demands for relaxations from brand owners. However, any easing of obligations or shifting of timelines could delay demand to future years, extend payback periods, and intensify competitive pressures in the industry.
Conclusion
The government’s strategic approach through these EPR norms aims not only to reduce virgin plastic usage but also to bolster the recycling industry, creating an increasing demand for high-quality recycled PET (rPET). These EPR mandates represent a significant opportunity, especially for recyclers with the capacity to supply high-grade material that meets stringent requirements of leading brands.
As India progresses toward achieving these milestones, companies with established networks, advanced recycling capabilities, and compliance with EPR mandates are likely to lead the way in the country’s transition to sustainable plastic management.