India’s plastic packaging margins may shrink 3-5% by H1FY27 on crude cost pressures – CareEdge

INDIA – CareEdge Advisory has warned that India’s plastic packaging players could see operating margins decline by 3 to 5 percent by H1FY27 if crude oil prices spike again, as rising raw material and logistics costs outpace delayed price revisions.

Brent crude prices have surged from an average of US$64 per barrel in Q3FY26 to approximately US$80 per barrel in Q4FY26, briefly crossing US$118 per barrel in early March.

Plastics account for nearly 46 percent of India’s packaging mix.

The plastic packaging market is estimated at ₹3,558 billion (approximately US$42.7 billion) in CY25 and projected to reach ₹5,169 billion (approximately US$62 billion) by CY30, a 7.5 percent CAGR.

Why Margins Are Under Pressure

Higher crude increases oil-derived feedstock costs, pushing up polymer prices for PP, PE, and PET. Packaging contracts are revised with a time lag, forcing manufacturers to absorb cost increases initially.

The impact will hit flexible packaging, PET bottles, FMCG, and food & beverage players hardest. Pharma, industrial packaging, and e-commerce may see moderate impact.

Import Dependence Amplifies the Shock

India remains heavily dependent on imported polymers, particularly from the Middle East.

In 2025, approximately 48 percent of India’s polyethylene import value came from the UAE, Saudi Arabia, Oman, and Kuwait. Higher freight costs, longer shipping routes, and insurance surcharges are making the packaging supply chain more expensive and less predictable.

Historical Precedent from Russia-Ukraine War

During the Russia-Ukraine conflict, packaging EBITDA margins softened from approximately 17-18 percent to nearly 11-13 percent as players could not fully pass on cost increases.

Sagar Desai, Assistant Director at CareEdge Advisory, noted that a sustained 5-10 percent crude increase may lead to 3-5 percent margin pressure for highly exposed players by H1FY27.

When Oil Moves, Packaging Feels It First

India’s plastic packaging industry has demand on its side, packaged food, e-commerce, and retail are growing. But its input structure remains fragile.

Every dollar crude moves up, polymers follow. Every polymer price spike, margins compress. The question is not whether the next crude shock will come, but whether packaging players can pass costs faster than oil climbs.

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