Geopolitical Tensions Trigger Cost Surge
India’s medical device manufacturers are facing a significant cost shock as geopolitical tensions in West Asia disrupt energy supplies and push petrochemical prices higher. As a result, producers of essential hospital consumables such as syringes, IV sets, and catheters are experiencing severe margin pressure.
Industry leaders report that the combined impact of gas supply restrictions and rising plastic raw material prices is particularly challenging for a sector largely composed of small and medium enterprises.
According to Rajiv Nath, Forum Coordinator of the Association of Indian Medical Device Industry (AiMeD) and representative of Hindustan Syringes and Medical Devices, the situation has intensified due to disruptions linked to tensions around the Strait of Hormuz. He noted that input costs for plastics have risen by nearly 50 percent, while gas prices supplied by Adani Total Gas have doubled. Consequently, manufacturers are struggling to maintain margins on essential products such as syringes and catheters.
This development comes at a time when the sector has been expanding exports and strengthening domestic production under the government’s Atmanirbhar Bharat initiative for medical device manufacturing.
Energy Supply Disruptions Affect Production
Manufacturers report that the pressure began when gas suppliers notified industrial customers of supply restrictions linked to disruptions in LNG shipments moving through West Asia.
In a recent communication to customers, Adani Total Gas announced that gas supplies would be limited to 40 percent of the daily contracted quantity until further notice. At the same time, the company revised the price of excess gas significantly. The contracted MGO gas price of about ₹55.60 per SCM has effectively doubled to approximately ₹119.90 per SCM.
Gas plays a critical role in medical device manufacturing. Companies use it for sterilisation processes, moulding operations, and heating systems required to produce disposable healthcare products.
Although manufacturers may manage short-term disruptions through operational adjustments, industry executives warn that prolonged supply restrictions could begin to affect production levels.
Sharp Rise in Polymer Prices
Meanwhile, companies are also grappling with a rapid escalation in polymer prices, the primary raw material used in most medical disposables.
Materials such as Polypropylene, Polyethylene, and Polyvinyl Chloride are widely used in products including syringes, IV sets, catheters, and blood bags. Over the past few weeks, domestic suppliers have repeatedly revised prices for these materials.
Industry data indicates that polymer prices increased several times in March alone. On March 1, polypropylene rose by ₹2 per kg, while LLDPE and HDPE increased by ₹2,500 per tonne. Two days later, on March 3, polypropylene prices climbed by another ₹6 per kg, and LLDPE and HDPE rose by ₹6,000 per tonne.
The increases intensified further during the month. On March 6, polypropylene prices increased by ₹15 per kg, while LLDPE and HDPE rose by ₹15,000 per tonne. Subsequently, PVC prices increased by ₹13,000 per tonne on March 10. The following day, polypropylene prices surged by ₹23 per kg, and LLDPE and HDPE rose by ₹20,000 to ₹24,000 per tonne.
Overall, industry estimates suggest that plastic input costs have increased by nearly 50 percent in recent weeks.
Manufacturers Face Growing Margin Pressure
For many companies, particularly small and medium manufacturers that form the backbone of India’s medical consumables ecosystem, the simultaneous rise in energy and raw material costs is putting significant strain on operations.
Although shipment delays of one to three weeks caused by disruptions in global shipping routes remain manageable through inventory buffers, industry representatives caution that prolonged disruptions could affect manufacturing output.
Nath warned that extended supply interruptions could lead to production slowdowns, shortages of hospital consumables, and price inflation caused by market dominance among raw material suppliers.
India’s medical device sector currently employs more than five lakh workers, many of them in small manufacturing clusters that produce large volumes of disposable healthcare products for domestic use and export markets.
Structural Policy Challenges Add to Pressure
As reported by Business Today, the current cost shock has also highlighted structural challenges faced by domestic manufacturers, particularly the sector’s inverted GST structure.
Manufacturers typically pay 18 percent GST on raw material inputs, while many finished medical consumables such as syringes and catheters attract only 5 percent GST. Consequently, companies accumulate unutilised input tax credits, which tie up valuable working capital.
Industry bodies note that the situation becomes particularly difficult during periods of input price volatility, when manufacturers must pay higher taxes on increasingly expensive raw materials.
As a result, industry representatives have urged the government to accelerate refunds of excess GST credits to ease working capital pressure and support the sector.
Manufacturers Try to Avoid Immediate Price Hikes
Despite the sharp rise in costs, some manufacturers say they are reluctant to immediately pass on the increase to hospitals and patients.
Rajiv Nath stated that Hindustan Syringes and Medical Devices does not plan to follow raw material suppliers in rapidly raising prices. Instead, the company intends to wait until existing lower-cost inventory is exhausted before revising product prices.
For now, manufacturers are relying on existing stock and operational adjustments to absorb the cost shock. However, industry executives caution that if disruptions in energy supplies and polymer prices continue, companies may eventually have no choice but to revise prices.