Recycled PET Sector In Doldrums Due To Regulatory Delays

It’s a clear case of one government body standing in the way of proper implementation of another government wing’s vision and strategy! The recycled PET manufacturers across the country are in a soup. Close to 50 per cent of the new investment in this sector has been funded through bank debt. And now delay in commencing commercial production (for no fault of their own) has landed them in huge trouble in servicing this debt. Strangely, the problem began with the delay in granting licences by FSSAI.

The delay in granting of licences by FSSAI to the factories set up by recycled PET manufacturers is likely to push a majority of these companies into bankruptcy. That’s what the Association of PET Recyclers (Bharat) – APR Bharat, has brought to light.

Interestingly, the industry has set up a total capacity of 4 lakh MT at an estimated investment of Rs 7500-8000 crore to produce recycled polyethylene terephthalate (r-PET) for generating food-contact packaging material. Companies have adopted state-of-art technology and set up their factories adhering to standards approved by the European Food Safety Authority (EFSA) and US Food and Drug Administration (FDA).

The problem is while a handful of them have received the FSSAI nod, as many as 15 plants, which are fully commissioned, are still awaiting clearance from the regulator to commence commercial production.

Significantly, earlier, the Ministry of Environment, Forest and Climate Change (MoEFCC), had in 2022, issued guidelines on the mandatory usage of 30 per cent recycled food-grade plastic content into PET packaging bottles by beverage manufacturers, which were to come into effect from April 1, 2025. In the same year (2022-23), FSSAI came out with guidelines for recycling of post-consumer PET for food contact applications and five licences were issued and r-PET supplies have been used by brand owners since then, providing for a field validation on the use of r-PET, as was also acknowledged by FSSAI.

The revised FSSAI guidelines, which should have been in place at least 2-3 months before 1st April’25, were actually notified only in the last week of May 2025, which has further extended the timelines for licence issuance to more than nine applications pending with FSSAI since Dec’24/Jan’25.

Following regulatory guidance by MoEFCC and FSSAI in 2022, and based on the understanding that this would give a huge impetus to the demand for r-PET in packaging bottles by beverage manufacturers, the industry had started building capacities and a majority of them have been fully commissioned since January 2025. The nine applications pending with FSSAI has resulted in capacities lying idle. A majority of these investments have a significant component of debt and any delay in commencing operations could force these companies into bankruptcy.

If commercial production does not commence soon then these companies may face a huge fund crunch and may find it difficult to service the loan leading to most of these accounts turning into NPA (non-performing asset).

One must also keep in mind that the r-PET industry is estimated to generate 10,000 new jobs and also benefit the rag picker community of over 2 million people who collect post-consumer PET bottles and send them for recycling. The government and the concerned authorities must act immediately before things turn worse.