Volatility in crude oil prices and growing geopolitical uncertainty are beginning to ripple through India’s packaging ecosystem, pushing up input costs and tightening supply across the value chain.

Packaging costs in certain categories have already risen by more than 20% in recent days, according to Sanjay Gupta, senior vice president – Packaging Development at DS Group. The increase is being driven primarily by higher prices of key polymers such as polyethylene (PE) and polypropylene (PP), both of which are derived from petrochemicals and widely used in flexible and rigid plastic packaging.

“The recent volatility in crude oil prices, coupled with prevailing geopolitical uncertainties, is beginning to have a visible impact on the packaging ecosystem, particularly in flexible and rigid plastic packaging, which are directly linked to petrochemical derivatives,” Gupta said.

The spike is not limited to official price revisions. Gupta noted that the market is also seeing premiums being charged over listed resin prices as supply tightens and availability becomes uncertain.

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“In the last few days, the increase in key polymer prices such as PE and PP has started cascading through the value chain, and overall packaging costs in certain categories have already increased by more than 20%,” he said. “Apart from the increase in list prices of resins, the market is also witnessing premium being charged over list prices in some cases as tightening availability and supply uncertainties take hold.”

These supply pressures are also beginning to affect delivery timelines across the industry.

“As tightening availability and supply uncertainties take hold, these constraints are also beginning to result in longer lead times across the industry,” Gupta added.

What does the volatility mean for FMCG and consumer companies?

Packaging typically forms a relatively small but critical component of product costs across sectors such as FMCG, alcohol, food delivery and quick-service restaurants (QSRs). However, even modest increases can put pressure on margins when input prices spike suddenly.

According to Karan Taurani, senior vice president at Elara Capital, packaging usually accounts for about 5–10% of the overall cost of goods sold (COGS) for consumer companies.

The impact extends to food delivery platforms and QSR chains as well, where packaging is embedded in the average order value (AOV) charged to customers.

“Even in food tech you will see an impact there, because packaging is a component of your AOV as well, typically in the range of about ₹5 to ₹10 of the overall AOV which is eventually charged by the customer,” Taurani said.

In the near term, companies may face pressure on profitability if input costs remain elevated.

“There could be margin pressures for all these companies in the near term for the next three to four months, depending on how the situation evolves,” Taurani added.

Meanwhile, for FMCG, sudden shifts in input prices require close coordination with suppliers and careful planning across procurement and manufacturing operations.

“For FMCG companies, packaging forms an important component of the product cost structure, so such volatility requires proactive planning and very close coordination with the supply chain,” Gupta said.

At DS Group, the company has been working closely with its converting partners to manage supply risks and ensure continuity. Maintaining direct communication with raw material manufacturers supplying converters has helped the company anticipate changes early.

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“Another factor that gives us relatively better visibility is that we maintain a direct connect with the raw material manufacturers supplying to our converters, which helps us understand developments early and take timely decisions,” he explained.

The company has also expanded its vendor base in recent years by onboarding associate suppliers with strong regional presence. According to Gupta, such partnerships add agility and resilience during periods of disruption.

Despite the current pressures, Gupta remains optimistic about the sector’s ability to adapt. “Over the last two decades the industry has gone through many turbulences, and each time the ecosystem has emerged stronger,” he said. “We are monitoring the system closely, given the multiple global uncertainties influencing the petrochemical and logistics ecosystem.”

Even if crude prices stabilise, Taurani cautioned that supply chains could remain under strain in the near term.

“Given the kind of disruption we have already seen, I think at least for four weeks there could be elevated pressures on the supply chain,” he said, adding that if the situation prolongs, the impact could extend for several more weeks or even months.