Why recycling struggles when new plastic is cheap — and how India is trying to change that
To most, recycling plastic sounds straightforward: collect discarded bottles, process them, and turn the material into new packaging. However, the economics are considerably more difficult.
When newly manufactured, or virgin, plastic becomes cheap, companies can have little financial reason to buy recycled material instead.
Recyclers have to pay to collect, sort and process discarded plastic, while prices for virgin plastic fluctuate with oil and petrochemical markets. The Organisation for Economic Co-operation and Development (OECD) says this can leave recyclers vulnerable when virgin material becomes cheap.
“In a quarter when virgin plastic price is very low, there is no incentive for the market to buy recycled plastic because it is more expensive than virgin,” Banyan Nation founder Mani Vajpayee told Global South World.
The challenge is substantial. India generated about 4.14 million tonnes of plastic waste in 2022–23, the latest nationwide figure cited by the country's environment ministry as of March 2026.
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India is trying to change the economics through regulation.
Creating a market by law
Under the country's Extended Producer Responsibility framework, producers, importers and brand owners face mandatory recycled-content requirements.
For 2026–27, Category I rigid plastic packaging must contain 40% recycled plastic, while Category II flexible packaging must contain 10%. The targets rise to 60% and 20% respectively from 2028–29.
The rules help guarantee demand even when virgin plastic is cheaper.
“Without policy, recycled plastic will just be a cosplay for brands and for companies,” Mani said. “If it is not policy, then it will continue to be a shadow economy whether it is in Latin America, Africa or even India.”
The OECD has found that mandatory recycled-content requirements can stimulate demand for secondary plastics, although challenges around supply and quality remain.
Banyan Nation shows how that market can work.
The Hyderabad-headquartered recycling company works with informal waste collectors and aggregators, known locally as "kabadiwalas", who collect and separate discarded plastics. Banyan Nation then uses sorting, washing, filtration and other processes to produce recycled polyolefins that can return to mainstream packaging, including shampoo, detergent and personal-care bottles.
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The company says it has integrated thousands of informal collectors and aggregators into its supply chain and has helped put more than three billion bottles made with its recycled plastic onto store shelves.
Those informal workers are not a side issue, says Mani.
“They are the foundation on which our supply chain works,” he said.
Recycling is not enough
One of the clearest warnings from the founder of a recycling company is that recycling itself cannot solve plastic pollution.
Some packaging is inherently easier to recover than others. Bottles made from relatively simple plastic streams can be collected and recycled repeatedly, although polymers lose strength through successive heating cycles.
Other packaging is much harder. Mani pointed to chip packets, which can combine different polymers, adhesives, printing and metallic layers. Processing such materials can become so difficult and expensive that conventional mechanical recycling makes little economic sense.
India's own waste rules distinguish between rigid, flexible and multilayered packaging, reflecting those differences in how materials can be collected and processed.
“Plastic recycling cannot be the real, the full solution or the complete solution,” Mani said.
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He argues that reducing pollution also requires packaging designed for recyclability, better municipal collection systems, reuse, stronger producer responsibility and enforcement, something UNEP similarly argues.
That lesson may be particularly relevant across the Global South, where informal workers often perform much of the collection that formal waste systems cannot.
Mani cautioned against simply transplanting systems developed in wealthier economies into countries with different infrastructure, financing and collection networks.
“What solutions work in Europe or the US or Australia may not work in India, Africa or Latin America,” he said.
And despite building a business whose revenues depend on recycling plastic, Mani said society should ultimately use less plastic.
“I don't want my cows in India eating plastic or my river Ganga flowing with plastics,” he said. “That's not what we have envisaged the world to be for our children.”
For Banyan Nation, however, using less plastic does not necessarily mean less room to grow. Mani said the company can expand by replacing more virgin plastic with recycled material rather than depending on overall plastic consumption to increase. And as India raises its mandatory recycled-content requirements in the coming years, that could create a larger market for companies capable of turning discarded plastic back into material manufacturers can use.
This story is written and edited by the Global South World team, you can contact us here.
