Cost pressure on Gujarat's plastics manufacturing sector has increased as polymer prices have risen sharply following a rise in crude oil prices amid the impact of the Israel-Iran conflict. According to plastic manufacturers, the sudden increase in raw material prices has significantly increased input costs, changed procurement processes and forced many units to operate at much lower capacity than their installed production capacity. Gujarat is the leading state in the country in the field of plastic production. Gujarat accounts for approximately 35 to 40 percent of the country's total plastic production and more than 15,000 to 20,000 plastic manufacturing units are operating in the state. Which provides employment to five to seven lakh people. From small molding workshops to large processors producing packaging, consumer goods and automobile components, rising polymer prices are having an impact. According to industry representatives, polymer prices have increased significantly in the past few months. This has reduced the profit margins of manufacturers and also put a huge pressure on working capital. The situation has become more difficult, especially for small and medium-sized units. Units, which earlier kept enough raw material in stock to account for fluctuations in prices and supply, have now reduced purchases. Ramesh Thummar, secretary of Plexpo, Gujarat State Plastic Manufacturers Association, said that earlier manufacturers used to keep stocks of raw materials to meet the volatility in supply, but in the current situation it has reduced significantly. Financial pressures are greatest for small and medium enterprises. It is becoming difficult for them to keep enough stock at high prices. According to him, some factories are currently running at less than half of their total production capacity. If this situation persists for a long time, some industries may even consider temporarily stopping production after Diwali. Constant fluctuation in raw material prices has also changed the purchasing pattern of manufacturers. Earlier, companies used to buy large quantities of raw materials to keep stock, whereas now, short-term purchases are being made as needed to avoid getting money stuck in expensive stocks. However, this method also increases the risk of halting production in the event of a further price hike or supply disruption. Amidst this challenging situation, industry leaders believe that rising demand for plastics in new sectors can support the industry after stabilization of raw material prices. Plexpo Chairman Bharat Patel said that the use of plastics in areas such as electric mobility and renewable energy is growing rapidly. New opportunities are emerging for plastic processors, particularly in electric vehicle components and products associated with the solar supply chain. Meanwhile, Gujarat State Plastic Manufacturers Association has announced its flagship industry exhibition Plexpo-2027. The exhibition will be held in September 2027 at Gandhinagar. Organizers expect the participation of more than 900 exhibitors. Amidst the current challenge of high raw material prices, the exhibition will provide an important platform for companies involved in the plastics industry to explore new markets, technologies and business opportunities. In this context, Plexpo committee member Prerak Patel said that food processing industries are dependent on packaging. The increase in the prices of packaging materials has led to an increase in the cost of packing, thereby putting an additional burden on the food processing, confectionery industries and reducing the profitability of the sector, which may turn into an adverse scenario in the long run. Overall, the current times are challenging for the plastics industry in Gujarat due to rising polymer prices. Maintaining working capital and production capacity has become a major challenge especially for small and medium enterprises. However, growing demand in emerging sectors such as EVs and renewable energy could bring new hope for the industry in the long run.
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