India's plastic recycling players are facing a severe challenge of under-utilisation of capacity despite the government's push for mandatory use of recycled content in plastic packaging, an industry body said on Tuesday.

The recycled PET (polyethylene terephthalate) or r-PET industry, which has installed nearly 4.39 lakh tonnes of capacity with an investment of around ₹10,000 crore, is witnessing 20-25 per cent of its capacities lying idle due to weak demand from plastic packaging users and brands, said Goutham Jain, Director General, APR (Association of PET Recyclers) Bharat.

He alleged that the brands are not fully complying with mandated recycled content norms.

"The government's nudge, coupled with the mandate in place, should have translated into a healthy demand for r-PET. However, we have not seen demand picking up as plastic packaging users/brands have not been adhering to the mandate," Jain said.

The Ministry of Environment, Forest and Climate Change (MoEFCC), in its latest guidelines issued in March, mandated the use of 40 per cent recycled content in food-grade PET packaging in 2026-27, starting April 1.

In addition, they are also expected to carry forward unfulfilled targets for 30 per cent of the mandatory use of recycled content of FY25-26 for up to three consecutive years, with a minimum of one-third of the carry-forward target to be achieved every year.

Moreover, r-PET will also help reduce dependence on imports, he said.

The government's recent emphasis is on reducing import dependence on petrochemical products and promoting indigenisation of more than 200 import-dependent items to conserve foreign exchange reserves.

Jain said r-PET offers a sustainable and commercially viable domestic alternative to virgin petrochemical derivatives, helping lower import dependence and strengthen supply chain resilience.

"Virgin PET availability and prices are widely affected by external shocks. A strong domestic r-PET ecosystem gives India a more stable local source of raw material," he said, adding that every tonne of recycled PET used conserves fossil fuels, lowers carbon emissions and improves packaging security.

Rejecting concerns over the inadequate supply of food-grade r-PET, APR Bharat said India has sufficient approved capacity to meet the regulatory requirements.

Published on May 27, 2026