Energy crisis affects India's glass industry: packaging costs surge by 30%, forcing the alcohol and cosmetics industries to raise prices.

Due to the energy shortages triggered by the Middle East war, Indian glass factories have been forced to cut production, putting pressure on buyers of beverage bottles and medicinal glass bottles. From milk bottles to jam jars, and now to medicinal glass bottles, glass products in India are becoming increasingly difficult to obtain. At least six industries that rely on glass supplies have been impacted by the severe energy shortage in Indian domestic glass factories. The glass industry is crucial for many consumer and industrial products, from milk bottles to car headlights, and even test tubes. Kuldeep Sharma, director of Pharmakon Health & Beauty Care, a cosmetics contract manufacturing company based in New Delhi, said that the packaging costs for facial serums and cream jars have risen by up to 30%. Sanjeet Padi, CEO of the Indian International Alcoholic Beverages and Wine Association, stated that glass and other costs have risen by over 20%, and are "very difficult to manage". Since alcoholic beverages are in a price-controlled industry, Padi, representing companies including Mot Hennessy and Diageo, expects state governments to assess the impact and allow companies to pass on the costs to consumers. The epicenter of the glass supply crisis in India is located in Firozabad - a glass manufacturing center in the northern state of Uttar Pradesh with a history of four centuries - but its effects are spreading throughout the entire economy. Local glass manufacturers rely on cleaner burning natural gas as fuel because high-emission fuels are prohibited due to their proximity to the Taj Mahal, one of India's most popular tourist attractions. In a dusty district in Firozabad, the private company S R Glass Industries supplies bottles to companies like Radico Khaitan, and jam jars for the local brand Tops. Due to the decrease in production, the company has suspended development of new clients, and put expansion plans on hold. The company's managing director, Pranjul Mittal, expects the glass production interruption to continue for several months. He said, "If the war is extended by a week, our business will be disrupted for a month. This means the next four months are already affected." The economy of Firozabad revolves around glass furnaces, which support a supply chain that extends globally. Glass melting factories must run round the clock at temperatures near 1500 degrees Celsius, or else the equipment will stop functioning. If the temperature drops, restarting the equipment will cost billions of rupees and require weeks of downtime. For Mukesh Kumar Bansal, a North Indian bottle supplier serving global clients like Diageo, Pernod Ricard, as well as local food giant Haldiram Snacks Food Pvt., the energy supply interruptions come as his company was preparing for the peak seasonal demand. He stated that in his forty years in the industry, he had never seen such a sudden supply squeeze. Apart from Firozabad, glass manufacturers across India have also reduced operations or completely shut down some factories. Maaricha Glass in Kosamba, Gujarat, in the west, has closed two out of five production lines and stopped accepting new orders for bottle exports. Founder of Iconic Glass LLP in Guwahati, Ayush Gupta, closed his container manufacturing factory last month after being unable to obtain the required 425 kg Liquefied Petroleum Gas (LPG) cylinders. As the only glass manufacturer in Assam, servicing local pharmaceutical companies and consumer goods companies like Dabur, Gupta's customers were left stranded. India's dependence on Middle Eastern fuel amplifies its energy import risks. The country relies on foreign sources for about half of its natural gas, with only Qatar providing about 40% of the liquefied natural gas (LNG). Almost 90% of India's LPG imports come from the Middle East, mostly transported through the Strait of Hormuz. The fragile ceasefire between the US and Iran has raised hopes for the reopening of the Strait of Hormuz. Despite the two-week ceasefire between the US and Iran, Indian manufacturers say it will take at least a few weeks to ease the shortage of natural gas. Some are concerned that the pause in hostile actions in the Persian Gulf region may only be temporary. Bansal stated that there is still a lack of clarity on the prospects for LNG transportation. Due to the Indian government prioritizing natural gas supplies for residents, Bansal's company has seen production decrease by up to 50% after gas supplier GAIL India cut off the gas supply. Under the operational cost pressure of producing over 100 tons of glass daily, the company has raised prices by up to 20%. Meanwhile, experts remain skeptical about a rapid return to normalcy in the global energy market. Sanam Vakil, director of the Middle East and North Africa Program at Chatham House in London, stated, "We are still in the fog of war until a solution is reached." According to preliminary survey data released by HSBC, manufacturing activities in India in March this year fell to their lowest level in nearly 4.5 years as factories reduced production due to the natural gas shortages caused by the Middle East war. Pranjul Bhandari, chief economist of HSBC India, stated that the impact on manufacturing has been severe, with "businesses saying that the Middle East war, the unstable market environment, and inflationary pressures have suppressed growth." Additionally, the shortage of natural gas supply has impacted restaurants, hostels, and informal food establishments, disrupting the spring wedding season in India as well as cooking activities nationwide. Back in Firozabad, known for its glass manufacturing techniques from the Mughal era and with a population of 2.5 million, the shortage of natural gas supply is now threatening the survival of about 200 small and medium-sized factories and thousands of related decor manufacturing enterprises and retailers. In addition to the bottle manufacturing business, Mittal, the executive of S R Glass Industries, also owns seven bangle factories, all of which have been forced to reduce production. He does not expect a significant improvement in natural gas supply in the short term, and expresses concerns about the uncertainty brought about by US President Trump's usual strategy of applying pressure on the edge. He said, "You never know what Trump will say next, any of his statements could change the situation."