Indore: Spike in prices of packaging materials has squeezed profit margins for small and medium enterprises and has raised worries over a likely forced cut in the production capacities.According to industry associations, cost of packaging materials such as aluminum blister foil, PVC, duplex boards and IPC pulp board among others mostly used by pharmaceuticals, confectionery, spices and food industry has risen by over 10 per cent.Malwa region of MP Laghu Udyod Bharti president Mahesh Gupta said, “Cost of packaging materials has gone up sharply and this is adversely hitting our businesses. Our margins have gone for a toss and unable to bear the burden, we are contemplating on decreasing output.”Gupta said he is in talks with clients to increase tariffs for final products but that customers are not agreeing to the price hike.Small scale industries are the worst hit due to increase in packaging material prices that are unlikely to get stable soon, according to industry players.MP Small Scale Drug Manufacturers’ Association member Amit Chawla said, “My monthly expenses have risen by about 7 per cent due to expensive packaging materials. My monthly budget for packaging materials is between Rs 60 to 70 lakh.”According to the MP Small Scale Drug Manufacturers’ Association, regional pharma industry shells out over Rs 10 crore per month on purchasing packaging materials.Chawala said, “The rise is very sharp and disturbing overall budget of industries. There is not much scope of passing price rise to customers, which means that manufacturer will have to bear all the heat that would definitely reflect on production capacities.”Vineet Jain, who owns a packaging material business said, “A lot of vacuum has been created in the local market because packaging materials are mostly imported and lesser imports in past few months has created a deficit in the market.”

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