The Indian packaging industry is confronting a moment of reckoning. What began as a geopolitical disruption has rapidly evolved into a systemic stress test for supply chains, cost structures and long-standing procurement relationships. With crude oil prices breaching $100 per barrel in March 2026, the ripple effects are being felt across industries, but nowhere more acutely than in packaging, where crude-linked raw materials form the backbone of production.

In recent weeks, prices of key inputs—resins such as PET, polypropylene (PP) and polyethylene (PE)—have surged between 40 per cent and 80 per cent, depending on the grade. Yet, the deeper disruption lies not only in price escalation, but in availability. For many plastic manufacturers, the challenge is no longer just higher raw material costs, but sourcing the material itself.

This dual pressure of inflation and scarcity is forcing a reset in how packaging companies operate. The industry is moving from a finely tuned model of cost efficiency to one defined by resilience, continuity and survival.

Packaging at the centre of disruption

The packaging industry is a critical enabler for sectors such as FMCG, pharmaceuticals, food and beverage, paints, agrochemicals and more. Any disruption in packaging supply directly affects production lines, retail shelves and, ultimately, product availability for consumers.

The current crisis has exposed the fragility of this interconnected system. Supply disruptions across polymer categories, particularly those dependent on imports from West Asia, have tightened availability. High-performance grades used in essential applications—from bottle caps in FMCG to pharmaceutical packaging—are facing constraints worsened by shipment delays and logistical bottlenecks.

At the same time, procurement cycles have stretched significantly. What was once a three-to-four-week lead time has now extended to six-to-eight weeks in many cases. This has a cascading effect: production planning becomes more complex, demand forecasting less certain, and working capital requirements significantly higher. For an industry built on efficiency, this is a structural disruption, not a temporary anomaly.

The end of cost-led procurement

For decades, procurement strategies in packaging were optimised around cost. The objective was clear: secure the lowest landed price, diversify suppliers to maintain competitive pricing, and operate on lean inventory cycles. This model worked in a relatively stable environment where supply was predictable and disruptions episodic.

That model is now being fundamentally challenged. In the current environment, availability has taken priority over cost. When raw materials are constrained, the ability to secure supply becomes more valuable than negotiating marginal price advantages. The cost of not having raw material—halted production lines, unfulfilled customer commitments and lost market share—far outweighs the impact of higher input prices.

This has led to a decisive shift from multi-supplier, spot-driven procurement to relationship-led sourcing models. Brands are increasingly consolidating their supplier base, prioritising long-term partnerships with strategic suppliers who can offer reliability, allocation priority and consistent supply in volatile conditions.

Procurement is evolving from a transactional function to a strategic one, anchored in trust, scale and long-term alignment.

From just-in-time to just-in-case

At the heart of this transformation lies a critical trade-off: inventory versus cost.

Historically, the industry operated on a just-in-time (JIT) model, minimising inventory to optimise working capital and reduce holding costs. In today’s environment, that approach is increasingly untenable. Supply uncertainty, extended lead times and volatile pricing have made lean inventory strategies a significant operational risk.

As a result, companies are shifting towards a just-in-case (JIC) model, building higher inventory buffers to safeguard against disruptions. This shift, however, comes at a cost.

Holding inventory at elevated raw material prices locks up significant working capital. Financing costs rise, cash-flow cycles stretch and balance sheets come under pressure. Yet the alternative—running low on inventory and risking supply gaps—carries far greater consequences. Lost business, strained customer relationships and reputational damage can have long-term implications that far exceed short-term financial strain.

This is where divergence within the industry becomes most visible. Larger, well-capitalised players with strong balance sheets are able to absorb the cost of higher inventory and use it as a competitive advantage. Smaller players, constrained by limited working capital and weaker supplier access, are facing disproportionate stress. In many ways, inventory is no longer just an operational lever—it has become a strategic differentiator.

Relationship capital as a survival tool

If inventory is the buffer against uncertainty, relationships are the gateway to access.

In a supply-constrained environment, allocation decisions by suppliers are rarely neutral. They are influenced by scale, consistency and the depth of the relationship. Companies with long-standing contracts and meaningful volume commitments are more likely to secure priority access to materials, even when supply is limited.

This has elevated the importance of what can be termed ‘relationship capital’. While it may not appear on balance sheets, its impact is tangible and visible in allocation priority, reliability of supply and operational continuity.

On the customer side, relationships are also becoming more collaborative and transparent. Packaging manufacturers and their customers, such as FMCG or pharma players, are increasingly working together to navigate cost volatility, adjust pricing mechanisms and align on demand forecasts. There is growing recognition that supply-chain resilience is a shared responsibility, and that continuity of supply is more critical than short-term cost optimisation.

This shift is redefining partnerships across the value chain—from transactional engagements to strategic collaborations.

A structural shift: Scale, consolidation and localisation

What is unfolding today is not a cyclical disruption that will fade with stabilising crude prices. It represents a structural shift in how the packaging industry will operate from here on.

First, there are clear signs of a move towards scale and integration. Brands are increasingly rationalising their vendor base, preferring to work with partners who can guarantee supply continuity, absorb volatility and offer end-to-end capabilities. This naturally favours larger, organised players with integrated capabilities.

Second, recent disruption and geopolitical uncertainty are likely to trigger consolidation within the industry. Smaller, less integrated players are already facing pressure from rising costs and limited access to materials, making it increasingly difficult to compete. The combination of supply constraints, working capital stress and rising customer expectations is creating conditions for significant consolidation over the next few years.

Third, there is a growing emphasis on localisation and supply-chain resilience. While India is largely self-sufficient in many resin categories, this disruption is likely to accelerate efforts to localise specialised grades and reduce dependency on volatile import channels.

Together, these shifts are reshaping the competitive landscape, rewarding resilience, scale and strategic alignment.

Disruption as a catalyst for circularity

Amid the disruption, an unexpected trend is likely to gain momentum—the acceleration of circularity in plastics. The high cost of virgin resins and scarcity are encouraging companies to explore recycled alternatives more actively, while policymakers are also supporting this shift.

Starting April 1, the Government has mandated producers to use 40 per cent recycled content in packaging, which may accelerate the adoption of recycled PET across the food and beverage sector. Extended Producer Responsibility (EPR) norms have also begun to reinforce the shift towards recycling in plastics. By mandating recycling targets, policymakers are pushing companies to invest in traceability, recycling partnerships and recovery infrastructure.

However, the transition remains complex. It requires investment in collection infrastructure by government, manufacturers, corporates and consumers. It also requires process adjustments by manufacturers, regulatory compliance and supply-chain realignment so that the economics shift in favour of recycled materials.

At present, high-quality recycled material availability is still limited, regulatory frameworks are evolving, and applications such as food and pharmaceutical packaging require stringent compliance. As a result, adoption is likely to accelerate gradually rather than immediately. While execution remains a challenge, EPR is an important step towards aligning business incentives with sustainability outcomes.

Nonetheless, the current crisis is reinforcing a long-term direction: sustainability and resilience are no longer separate agendas—they are increasingly intertwined.

Opportunity beyond survival

The packaging industry is undergoing a profound transformation. What was once a cost-optimised, efficiency-driven ecosystem is evolving into one where resilience, relationships and resource security define success.

The shift from just-in-time to just-in-case operating models, from cost-led procurement to supply-assured sourcing, and from transactional interactions to strategic partnerships reflects a deeper change in priorities. In this new reality, the ability to secure material, maintain continuity and collaborate across the value chain is becoming more valuable than incremental cost savings.

For companies that can navigate this transition—leveraging strong supplier relationships, maintaining inventory discipline, building financial resilience and developing integrated capabilities—the current disruption presents an opportunity not just to survive, but to emerge stronger, more integrated and more strategically relevant.

About the author

Thimmaiah Napanda is the CEO & Managing Director of Alternicq Limited, which is now a portfolio company of global private equity firm PAG. He is a distinguished business leader with over 29 years of leadership experience across automotive and manufacturing sectors in India and the Asia-Pacific region.  Prior to the current ownership he successfully led Alternicq Limited (formerly known as Manjushree Technopack Ltd) through a landmark enterprise valuation and strategic exit to Advent International, making it one of the most significant transactions in India’s packaging industry.