Energy disruptions and sharp polymer price hikes are squeezing margins for makers of syringes, IV sets, and other hospital consumables

India’s medical device manufacturing sector is facing a significant cost challenge as gas supply curbs and rising polymer prices push up production costs for essential hospital consumables such as syringes, IV sets, and catheters.

Industry leaders say that geopolitical tensions in West Asia have disrupted energy supply routes, triggering a surge in petrochemical prices and creating additional pressure on manufacturers already operating on thin margins.

Energy Supply Disruptions Impact Production

Medical device manufacturers report that restrictions on gas supplies have begun affecting industrial operations across the country. Gas distributors have informed several industrial clients that supplies will be limited due to disruptions in liquefied natural gas (LNG) shipments passing through West Asia.

In a recent communication to customers, Adani Total Gas said that gas supply would be limited to 40 percent of the contracted daily quantity until further notice.

Alongside the supply restrictions, gas prices have also risen sharply. The contracted MGO gas price of around ₹55.60 per SCM has increased to nearly ₹119.90 per SCM, significantly increasing operational costs for manufacturers.

Gas is a critical component in the medical device manufacturing process, used for sterilisation, moulding operations, and heating systems involved in producing disposable healthcare products.

Polymer Price Hikes Add to Cost Pressure

At the same time, the industry is grappling with a steep rise in plastic raw material prices, particularly polymers used in medical disposables.

Key materials such as polypropylene (PP), polyethylene (PE), and PVC are widely used to manufacture products like syringes, IV sets, blood bags, and catheters.

Industry data shows that polymer prices have seen multiple revisions in March alone. For instance:

On March 1, polypropylene prices increased by ₹2 per kg, while LLDPE and HDPE rose by ₹2,500 per tonne.
By March 3, polypropylene rose again by ₹6 per kg, with LLDPE and HDPE increasing by ₹6,000 per tonne.
On March 6, polypropylene prices jumped by ₹15 per kg, and LLDPE/HDPE increased by ₹15,000 per tonne.
PVC prices surged by ₹13,000 per tonne on March 10.

Another sharp increase followed on March 11, with polypropylene rising ₹23 per kg and LLDPE/HDPE increasing by ₹20,000–₹24,000 per tonne.
Overall, plastic input costs have surged by nearly 50 percent in recent weeks, placing severe pressure on manufacturers.

Margins Under Strain for Small Manufacturers

India’s medical device industry is largely composed of small and medium enterprises (SMEs) that produce large volumes of disposable healthcare products for hospitals and export markets.

According to Association of Indian Medical Device Industry, the twin shock of rising energy costs and raw material prices is rapidly eroding margins across the sector.

Rajiv Nath, Forum Coordinator at AiMeD and a representative of Hindustan Syringes & Medical Devices, said the situation is becoming increasingly challenging.

He noted that disruptions linked to tensions in West Asia and the Strait of Hormuz shipping route have pushed plastic input costs up by nearly 50 percent while also doubling gas prices used in manufacturing.

Risk of Production Disruptions

Manufacturers say short-term shipping delays of one to three weeks can still be managed through existing inventory buffers. However, prolonged disruptions in supply chains could affect production levels.

Industry representatives warn that extended shortages could eventually lead to hospital supply gaps and higher prices for essential medical consumables.

India’s medical device sector currently employs over five lakh workers, many of whom work in manufacturing clusters producing critical hospital supplies for domestic and international markets.

Inverted GST Structure Adds Financial Pressure

The situation is further complicated by the sector’s inverted GST structure.

Manufacturers typically pay 18 percent GST on raw material inputs, while finished medical consumables such as syringes and catheters are taxed at 5 percent GST. This creates a buildup of unutilised input tax credits, locking up working capital for manufacturers.

Industry associations have repeatedly urged the government to speed up GST refunds to ease liquidity pressures, especially during periods of rising input costs.

Manufacturers Holding Prices for Now

Despite the sudden spike in costs, some companies say they are trying to avoid passing on the burden to hospitals and patients immediately.

Industry leaders say manufacturers are currently relying on existing inventory and operational adjustments to absorb the cost shock. However, if disruptions in energy supply and polymer pricing continue, companies may eventually have to revise prices for essential medical consumables.