Polymer prices surge nearly 40% as Middle East unrest squeezes Indian exporters, hitting handicrafts, agriculture hard

INDIA – Indian exporters are facing a severe cost squeeze as polymer prices have jumped nearly 40% since the escalation of the West Asia conflict, with packaging now accounting for 10 to 15% of product costs in handicrafts and doubling packaging material costs for sectors such as onion exports, prompting urgent calls for government intervention.

The ongoing conflict has sent crude oil prices soaring, directly impacting the cost of crude-linked derivatives including polyethylene and polypropylene used in packaging materials. 

Ajay Sahai, Director General and CEO of the Federation of Indian Export Organisations (FIEO), explained that the crisis has increased overall export costs at a time when businesses are already under pressure from weak global demand and earlier tariff-related disruptions.

Handicrafts and Agriculture Bear the Brunt

Handicraft makers and agricultural exporters are feeling the pinch the most. 

For sectors such as handicrafts, where fragile products require extensive protective packaging, packaging costs can account for 10 to 15% of the total product cost. 

Vikas Singh, an onion exporter, stated that shortages of polypropylene granules have disrupted supply chains and doubled packaging material costs for some sectors, making it difficult to fulfill orders. 

“The shortage of PP bags is huge at present,” he said.

The crisis follows a period when many firms were still recovering from tariffs imposed earlier by former US President Donald Trump, adding another layer of financial strain on export-oriented businesses.

Supply Chains Under Stress

The price surge has affected everyday items including PP bags, plastic crates, and other essential packaging materials used across industries. 

Beyond pricing, exporters report severe shortages of polypropylene granules, the key raw material for producing plastic bags, crates, and containers used in agricultural and industrial packaging. 

The war’s disruption to shipping routes through the Strait of Hormuz has further compounded logistics challenges, making it difficult for businesses to secure timely deliveries of both raw materials and finished goods.

Government Response and Industry Appeals

Recognising the severity of the situation, the Government of India has convened high-level stakeholder consultations to address packaging, logistics, and shipping-related challenges.

The Commerce Secretary has emphasised the need for time-bound assessments of key packaging inputs, mapping domestic production capacity, and identifying import dependencies. 

A structured weekly monitoring mechanism for tracking export-import trends and sectoral stress indicators is also being instituted.

Exporters are now urging the government to provide relief measures and support to help businesses manage rising operational costs and supply disruptions, enabling them to keep orders moving without breaking the bank. 

With polymer costs expected to normalise only after four to six months if the conflict is resolved, the immediate outlook remains challenging for India’s export sector.

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