Sustainability has evolved from being a mere buzzword to a business imperative. This is predominantly driving growth and transformation in the global plastics recycling market, said Pratik Dalmia, Executive Director, Dalmia Polypro, adding "The market for recycled plastics has witnessed significant growth as companies across various industries integrate sustainability goals into their business models.” Regulatory mandates such as the Plastic Waste Management Rules have played a crucial role, he said adding, “One of the key aspects of these rules is the requirement for a minimum percentage of recycled plastic content in packaging, pushing companies towards adopting more sustainable alternatives." 

The global demand for recycled plastics is on the rise, driven by the implementation of regulations such as the Extended Producer Responsibility (EPR) framework, he said. “Large corporations are increasingly setting ambitious targets, often aiming for over 25% recycled content in their packaging, fueling demand across various regions.” he pointed out. 

India, the EPR rule mandates a requirement for the use of recycled content starting from April 1, 2025. "This has created a sense of urgency and industry participants are rising to the occasion with large investments to build the infrastructure needed to meet these upcoming demands."

Speaking about factors impacting profitability and sustainability, Dalmia pointed out, "PET recycling remains the dominant sector, largely due to clear guidelines on the use of recycled PET in food-contact applications." The recycling of other plastics such as HDPE and PP is also forecasted to grow in the coming years, he pointed out.

Dalmia also highlighted the issue of multi-layer plastic packaging, which is extensively used by FMCG companies. “While it's encouraging to see that this material is being upcycled into various products, it has not yet achieved full circularity in returning to packaging applications,” he said. 

Commenting on the primary obstacles that the Indian plastics recycling industry needs to overcome to achieve greater efficiency and effectiveness, lack of consumer awareness results in poor waste segregation at the source, increasing the burden on segregation resources and impacting both the profitability and quality of recycled output, he noted. 

Sharing comprehensive details on the evolution of the industry, Sahil Ghai, Senior Manager, EPR and Projects, The Shakti Plastic Industries, said "The B2B market in India's plastic recycling industry has existed for many years.” He explains that even with a minimal investment, individuals can set up small-scale recycling operations, highlighting the accessibility of the market. "With just $40, you can buy a small machine, process rigid plastics, and sell them at a decent profit. It's a business model that has been active for 10 to 20 years." 

The introduction of the Goods and Services Tax (GST) in the country has had a profound impact on the plastic recycling industry, driving formalisation across the board. "Post-GST, the market has quickly formalised. There's now a reverse tracking of GST bills, which has streamlined the process and brought more players into the formal sector."

Commenting on the impact of consumer demand on the industry, he said consumer behaviour has shifted, but not in a way that directly boosts demand for recycled plastic in India. He observed that consumers remain sceptical about the quality of products made from recycled plastic, especially when used in items like food packaging or T-shirts. Ghai sees potential in the real estate and agriculture sectors. "There's a growing demand for recycled materials in green real estate and agriculture," he said. "But overall, consumer demand in India remains limited. The bulk of the demand comes from the B2B sector and exports." 

He noted that the demand for recycled plastic granules is growing, particularly for specific grades and technical specifications like MFI (Melt Flow Index) and filter sizes. Despite this progress, recycled plastic is still often compared unfavourably to virgin plastic in terms of price. "Unlike in India, European counterparts are willing to pay more for recycled plastic because of its better carbon footprint.”

Global demand and the Indian context 

India's plastic recycling industry is increasingly influenced by global demand, particularly from Europe and North America. "There's a huge demand for recycled plastics from Europe, North America, and even Canada," he said, adding "These regions have set standards for recyclability, and their regulatory frameworks are forcing Indian industries to adapt." This has created a significant export demand for recycled plastic from India. Some Indian manufacturers, especially in packaging, struggle with a lack of buyers for specific recycled plastic types, indicating that domestic demand is not keeping pace with global trends. 

He stated that the quality of raw materials in India is a significant challenge. "The quality of waste we get in India is very poor compared to Europe. The ecosystem here isn't designed to produce the high-quality recycled products that are in demand globally." 

There is also a major issue with logistics; India’s vast distances and high transportation costs, especially between production centres and markets, add to the burden. Additionally, there is a decentralised and fragmented supply chain. “For instance, recycled plastic might be produced in one region and demanded in another that is thousands of kilometres away. High logistic costs only worsen this issue,” Ghai pointed out. The lack of standardised collection processes also affects the availability of quality raw materials. Municipal waste segregation is often incomplete, leading to highly contaminated plastic waste, which requires additional processing and drives up costs, he said. 

Bankey Bihari Goenka, Managing Director,  Pashupati Group, recollected that four to five decades back plastic recycling started to create cheaper products for lower market segments. “However, this changed recently due to advancement in technology, awareness amongst stakeholders and regulatory efforts by the national governments for handling plastic waste.” 

He observed the following trends: Consumer preference: More and more shoppers pick items made from recycled plastics. This pushes brands to use more recycled items in their products. Corporate sustainability: Businesses and brands have set ambitious targets to use more recycled plastics in their products and packaging. Availability of advance technology: Advancement in technology has made plastic recycling better and better. It can produce products closer to virgin in terms of quality. In India, the regulations that promote recycling are driving the change and boosting the demand for recycled materials over time.   

Goenka explained how economic factors such as the price of oil, virgin plastic, technology and labour cost and high taxes on raw materials impact the profitability and sustainability of plastics recycling. 

Challenges in India

India faces a multitude of challenges in its recycling sector, particularly due to underdeveloped infrastructure. One of the primary issues lies in the lack of proper waste collection and segregation systems, especially at management facilities. “This problem is exacerbated when it comes to polyolefin waste, which makes up a significant portion of plastic refuse. Without a well-structured system in place to manage this waste, recycling efforts become inconsistent and inefficient,” he added. 

Waste collection and processing are heavily reliant on informal workforce, and fluctuations in the economy can lead to reduced activity, which in turn lowers recycling rates.  Another significant issue is the lack of government support. “While government incentives have the potential to boost recycling efforts, the absence of such policies in India creates hurdles for the industry. The lack of incentives for the plastic recycling sector disrupts progress and discourages businesses from investing in recycling initiatives.”

The high taxes imposed on raw materials and finished goods pose a barrier to the economic viability of recycling operations. These taxes reduce profit margins, making recycling a less attractive venture for businesses, he explained. 

He also drew our attention to the problem of the high import duty on machinery required for producing quality recycled products. 

Global Market Growth

Commenting on the growth prospects, he said, the global recycled plastics market was valued at approx USD 42.5 billion in 2021 and is projected to reach USD 66.6 billion by 2027, growing at a CAGR of 8.1% during the forecast period (2022-2027). 

Europe is leading the demand for recycled plastics, driven by stringent regulations and high consumer awareness. In 2021, Europe accounted for around 30% of the global recycled plastics market. The demand in North America is also significant, with the U.S. being a major consumer. The region is expected to grow due to increasing corporate commitments and state-level regulations.

Asia-Pacific is experiencing rapid growth due to increasing industrial activities and evolving regulatory frameworks. Countries like China, Japan, India and South Korea are at the forefront. However, a robust regulatory framework and its proper implementation is desired to augment the growth of recycling efforts. 

In terms of industry application, the packaging industry stands as the largest consumer of recycled plastics, accounting for over 40% of the market. Recycled PET (rPET) is widely used in beverage bottles, making a significant contribution to this demand. However, despite the growing need for recycled polyolefins, efforts are hindered by improper collection systems and a lack of awareness.

In the textile sector, recycled plastics are increasingly used, particularly in producing polyester fibers for clothing and fabrics. Meanwhile, the automotive industry is also adopting recycled plastics in vehicle components to align with sustainability goals and regulatory standards.

Speaking of the recent developments in recycling technology, Paul Niedl, Commercial Head of Starlinger Recycling Technology, said, “In the past months we have noted that many  suppliers of sorting equipment work on incorporating AI into their detection and sorting equipment to better separate food-contact from non-food contact articles. This is an important contribution to improve the recycling rates and to reach Europe's ambitious 2030 targets under the Packaging & Packaging Waste Directive. He noted that Starlinger continues to be focused on high quality both on the equipment and the pellets. “Our equipment developments are all focused to obtain pellets in the best possible quality – IV/MFR, mechanical properties, optical appearance, low odour and ability to be used in direct food contact. Our vision is to keep the plastic as long as possible in the loop and that it was initially made for: Bottle goes back into bottle, film goes back into film, fiber goes back into fiber just to name a few.” The better the quality and properties of the pellets the higher the possibility to reuse in its initial loop or to even upcycle to more demanding applications, he added. 

Niedl drew our attention to the gaps in adopting technology. He said, “The hurdles are manifold from legal aspects such as lack of recycling targets, plastic collection rates and minimum recycling content in products to technical aspects such as design for recycling of the product and proper collections infrastructure.” 

Sandeep Patel, CEO, NEPRA, commented on the recent developments in the industry. He said, “Recycled plastic market has significantly gained traction in the last couple of quarters because of the demand from large brands due to changes in the EPR regulations.” Another contributor is the customers who have made sustainability commitments to reduce their dependencies on virgin plastic for their products and packaging. “Many such commitments made by customers will continue to evolve the recycled plastic market in the coming time and hopefully, we should see a constant upside demand for the next 4 to 5 years.”

He remarked that the demand-supply mismatch is expected to continue for the next couple of years. “Recycling companies will have better profitability subject to their ability to negotiate better. We expect the sector to have significant growth for the next few years and profitability for efficient operations will always be high.” 

He too echoed the views of other industry experts when he said that the biggest challenge with the plastic recycling industry was the collection and segregation infrastructure. “Improvements in that area will lead to increased efficiency at the processing level. Today, all efforts are being made at the recycling value chain side but not enough is done for the collection and segregation. With significant improvements and innovations, we can improve the economics as well as scalability of the overall recycling industry.”