The Green PET Mandate

The government’s mandate to use 30% recycled, food-grade plastic in all beverage bottles by April 1, 2025—and to gradually increase that percentage to 60% by 2028-29—is reshaping the financial landscape for India’s beverage industry. At first glance, the directive is an admirable push towards sustainability, promising a closed-loop recycling system that could reduce the nation’s ever-growing plastic waste. However, beneath the environmental rhetoric lies a stark financial challenge for companies that have long relied on cheaper, virgin plastic.

For beverage giants that account for nearly 70% of packaging in plastic, switching to recycled plastic means confronting a production process that is roughly 30% more expensive. The increased cost is driven not only by the higher price of food-grade recycled PET but also by the investments needed in technology and infrastructure to process contaminated and weakened recycled material. Currently, there are only a handful of Food Safety and Standards Authority-approved recycling plants in India, which means the supply of high-quality recycled plastic is severely limited compared to the industry’s demand

Financial pressures are mounting as companies face the dual risk of rising production costs and potential supply shortages, especially with the peak summer season just around the corner. Beverage manufacturers are concerned that these increased costs might force them to either pass the burden onto price-sensitive consumers or absorb losses that could hurt their competitive positioning. The lack of a robust, scalable recycling infrastructure creates uncertainty, leaving companies in a precarious position where any miscalculation could lead to significant financial setbacks.

Moreover, there is growing apprehension about the rigid timeline set by the government. With the recycling capacity expansion estimated to take two to three years, many leading players in the market are considering legal options or lobbying for a more gradual implementation. Executives argue that a phased approach—starting at a lower recycled content percentage and then slowly ramping up—would be more financially sustainable, allowing time for recycling technologies to catch up with regulatory demands

Beyond production, the logistical challenges add another layer of financial complexity. Securing a reliable supply of certified recycled plastic is critical, yet the current supply chain is plagued by inefficiencies and a lack of standardized quality controls. In some cases, companies may even resort to importing recycled plastic, which could negate the environmental benefits of the policy while further inflating costs. This scenario creates a classic chicken-and-egg problem where recyclers are hesitant to invest in food-grade processing without guaranteed demand, while bottlers are reluctant to change their production methods without a steady supply of high-quality recycled material.

The mandate, while well-intentioned, forces companies to make substantial upfront investments in technology and partnerships to ensure compliance. For a market operating on relatively thin margins, such capital expenditures are not trivial. The financial strain could widen the gap between large multinational corporations, which have the resources to adapt quickly, and smaller players who might struggle to meet the new standards. In this light, the sustainability drive is as much an economic challenge as it is an environmental one.

Yet, there are signs of progress. Innovative steps like Coca-Cola India’s recent launch of 100% rPET bottles for its Kinley water brand offer a glimpse into what could be possible with sufficient investment and government support

Such initiatives demonstrate that with the right mix of technology and infrastructure, it is possible to achieve both sustainability and financial viability. However, until the recycling ecosystem is robust enough to meet demand, the financial risks associated with this transition remain a major concern for the beverage industry.

Ultimately, the financial implications of the mandate compel the industry to balance environmental aspirations with economic realities. Beverage companies must carefully evaluate the cost-benefit equation of transitioning to recycled plastic, negotiate the trade-offs, and push for policies that reflect the current state of recycling technology and infrastructure. In doing so, they can work towards a more sustainable future without jeopardizing their financial stability.