Come April 1, the environment ministry’s guidelines mandating the use of recycled and reused plastic in packaging will take effect, significantly impacting the FMCG industry, which faces a double challenge—how to meet these norms and, if unable to sustain them, how to protect sales.
According to sources, the FMCG sector has approached the government, seeking relaxation in the guidelines issued by the environment ministry back in February 2022, given the industry’s claim that food-grade plastic recycling and reuse capacities are insufficient to meet requirements.
From as small as a sugar-boiled candy wrapper to pan masala sachets, biscuits, chips, and namkeen, all are sold in plastic packaging. However, since these are food products, the governing authority responsible for ensuring the food-grade safety of recycled or reused plastic packaging lies not just with the environment ministry but also with FSSAI.
Meanwhile, many FMCG majors are already attempting to recycle their plastic packaging but are uncertain about meeting the reuse clause. The environment ministry clearly states that reuse is only feasible for category-I rigid plastic such as PET.
As per the guidelines, since the brand owner handles packaging, the responsibility of compliance lies with them.
By FY26, the brand owner must reuse 10% of packaging for products sold in 0.9L–4.9L sizes and 70% for those above 5L.
According to FSSAI, since 2018, the reuse of plastic packaging below 5 litres has not been permitted in India. Reuse is only allowed for durable, easy-to-clean, and disinfectable containers of 5 litres and above.
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Additionally, the brand owner is required to recycle 50% of plastic packaging waste based on annual sales, though it does not have to be reused for the same products.
This does not mean that the brand owner has to use this recycled plastic waste to re-pack their products, rather the only responsibility is to ensure the right % of waste is collected and is recycled, which can be used in any industry.
Another requirement is that a certain portion of new packaging must be made from recycled plastic. Under these, there are 3 categories, first category states that the brand owner has to use a minimum of 30% of recycled packaging. And the 30% is of the total sales of the rigid plastic, like PET Bottle.
In the second category—10% of flexible plastic, such as wrappers, pouches, milk and oil packets, or chocolate and pan masala wrappers, must be made from recycled material.
Third category pertains to multi-layer plastic packaging – where the brand owner has to use minimum of 5% of recycled plastic sold in the year FY26. This multi-layer plastic is for example – a disposable coffee mug, which is of a paper or board content from outside but has a very thin layer of plastic inside.
For meeting these recycling norms, FSSAI, as of now, has only considered category 1 recycling based on food safety measures and the readiness of the industry, including the availability of recycled plastic manufacturers and recyclers.
Currently, only five factories producing recycled PET plastic have been able to meet food-grade standards and secure an FSSAI nod to sell such plastic. However, more such facilities are awaiting FSSAI approval.
Industry estimates suggest that these five FSSAI-approved manufacturing units can meet only around 15% of the demand required for compliance. To be seen is how the beverage industry, to begin with, will comply with the requirement of using a minimum of 30% recycled but new PET packaging in FY26.
Industry seeks phased approach
Currently, there is no indication that the environment ministry is rethinking or revising its targets for 30% recycled plastic content in packaging. The environment ministry has maintained its Extended Producer Responsibility (EPR) guidelines, mandating progressive year-wise recycling targets for plastic packaging, including 30-50% for 2024-25 and increasing in subsequent years.
Despite concerns, the government appears focused on enforcing compliance through amendments like the Plastic Waste Management Rules, 2025, which emphasize traceability and accountability for plastic waste. Industry bodies and companies have proposed phased implementation, but no official relaxation has been announced.
Key industry concerns
Some of the key industry concerns includes, firstly, the insufficient infrastructure and capacity, since India has limited production capacity of food-grade rPET (recycled PET) manufacturers, which can meet just 15% of the projected demand. Also, expanding recycling capacity takes 2-3 years, making it difficult to meet the 30% recycled content mandate by April 2025.
Secondly, material shortages, where there is limited availability of high-quality post-consumer PET waste and costly sorting and washing technologies hinder production. And some critical rPET standards remain in draft form, adding regulatory uncertainty.
“India’s ambition to enhance circularity in plastic packaging through the 30% recycled content mandate is a step in the right direction. However, limited food-grade rPET production capacity, material shortages, and high costs create significant challenges for the industry. Expanding recycling infrastructure takes time, and smaller businesses may struggle with rising costs and compliance pressures,” Manpreet Singh, Partner – ESG Strategy and Transformation, PwC India
He also said that ensuring food safety through advanced decontamination technologies remains a critical concern. “A phased implementation approach—gradually increasing recycled content targets—could help align industry readiness with sustainability objectives while fostering long-term investments in recycling capabilities,” added Singh.
Further, the industry is worried about the cost implications, especially when it comes to bottling costs. The industry fears that the cost could rise by up to 30%, with smaller companies particularly vulnerable due to limited resources. Followed by a potential price hikes for rPET resin may further strain the industry.
And lastly, the food safety concerns, where ensuring decontamination of recycled plastics is complex and requires advanced technologies like chemical recycling, which are not widely available.
Industry representations suggest that a phased approach, starting with a 15% target and increasing by 5% annually, to align with domestic infrastructure capabilities.
