India’s ambitious circular economy goals, championed by Prime Minister Narendra Modi, are facing a significant setback as the recycled PET (r-PET) industry raises concerns over low adoption of recycled plastics by major brand owners.

Despite the Ministry of Environment, Forest and Climate Change (MoEFCC) mandating a 30% recycled content requirement in rigid Category-1 PET packaging for beverage companies, effective April 1, 2025, brand owners are reportedly delaying procurement. This hesitation is attributed to confusion caused by recent proposed amendments to the Plastic Waste Management (PWM) Rules.

The MoEFCC’s proposed amendment on June 3, 2025, allows brand owners to carry forward shortfalls in meeting the 30% r-PET target for food-contact applications during 2025-26 over the next three years. According to industry insiders, this flexibility has encouraged some brand owners to expect a possible rollback or relaxation of the target, leading to delays or avoidance in purchasing r-PET.

This policy uncertainty threatens to undermine India’s recycling infrastructure, which has developed independently without financial support from Producer Responsibility Organisations (PROs) or PIBOs (Producers, Importers, Brand Owners), said Shailendra Singh, Director General of the Association of PET Recyclers (APR), Bharat.

The r-PET industry has invested an estimated Rs. 7,500–8,000 crore, building a total planned capacity of 4 lakh metric tonnes—1.5 lakh MT of which is already operational and FSSAI-authorized, with another 1.5 lakh MT awaiting authorization. Yet, many facilities remain underutilized or inactive, raising concerns over a looming financial crisis and potential bankruptcies across the sector.

While the Food Safety and Standards Authority of India (FSSAI) has issued updated guidelines in line with the PWM 2024 provisions, allowing the use of r-PET in food-contact applications, delays by brands and retailers in implementing these measures are crippling the ecosystem crucial for India’s shift to a sustainable plastic economy.

Industry experts warn that this gap between policy goals and on-ground action risks reversing years of progress and jeopardizing India’s international climate and sustainability commitments.

“Recyclers have made significant investments in world-class, food-grade r-PET plants. But if enforcement remains weak and brand owners continue to default, the entire circular economy framework could collapse—mirroring challenges faced by some EU nations,” said Shailendra Singh.

While brands cite the unavailability of FSSAI-authorized capacities in India, even approved plants are being forced to shut down due to a lack of demand from the industry.

As India strives to establish itself as a global leader in sustainable development, the growing gap between regulatory ambitions and on-ground realities now poses a significant threat to the credibility of its green transition narrative.