Efficiency Improvement in Indian Flexible Packaging

The number that should worry every manufacturing head: OEE benchmark

A typical Indian plastics and packaging plant runs at 50-65% Overall Equipment Effectiveness (OEE). A typical US flexible packaging or corrugated converter runs at 65-80%.

Every point of OEE left on the table is capacity already paid for in machine time, labor and overheads that never reach a saleable roll or pouch. With raw materials making up roughly two-thirds of the operating cost base, how efficiently that material becomes finished product decides the margin more than the price negotiated at purchase.

How much is the gap and what it means:

Moving from the Indian midpoint (57.5% OEE) to the US midpoint (72.5% OEE) yields about 26% more saleable output from the same machines, crews and overheads. For a converter planning its next line, that is often capacity that does not need to be bought.

OEE splits every line loss into three pillars: availability (Is the line running?), performance (Is the line at full speed?) and quality (Is the line making good product?). Quality typically runs at 95-99% in packaging, so the larger pools sit in availability and performance, but quality losses are the costliest per unit because they waste material (Exhibit 1).

Exhibit 1: Indian packaging industry scenario

Efficiency takeaway:

Start with measurement. Manual logs overstate OEE by 8-15 points, so the largest pools (short stops, speed loss, start-up time) are the least visible.

Demand, supply and industry structure are making efficiency more critical

India’s packaging market is expected to grow from about USD 101B in 2025 to USD 170B by 2030, with flexible packaging driving much of this growth. Quick commerce and new pack formats are also increasing the number of SKUs and shortening production runs, leading to more changeovers and lower machine availability. At the same time, supply is growing faster than demand, with eight new BOPET lines adding more than 300 KT of capacity in 2022. In this oversupplied and fragmented market, with 22,000+ converters, inefficient plants have less room to pass on higher costs, making OEE and operating efficiency increasingly important.

Efficiency takeaway:

Growth will not close the gap on its own. Shorter runs erode availability, and overcapacity removes the price cushion that once absorbed inefficiency.

Efficiency can move about a third of the cost base, increasing EBITDA by up to 2 pps on 10 pps improvement in OEE

For the average Indian packaging industry, materials absorb about 64% of revenue, employees 10%, power and fuel 5% and other operating costs 12%, leaving an EBITDA margin of about 9%, against roughly 17.5% for the global average (Exhibit 2). Material prices track polymer markets and are largely outside a plant's control; what efficiency can move is material waste, labor productivity, energy per kilogram and the maintenance-linked part of other costs.

Exhibit 2: Revenue breakdown and expected EBITDA improvement

Efficiency takeaway:

Efficiency optimization will reduce employee and power costs, and result in about 2-3 pps improvement in EBITDA on moving from Indian OEE to US OEE benchmarks

Five horizontal levers that cut across every loss

The five levers address losses across availability, performance and quality, with different speeds and levels of impact. Digital transformation and changeover optimization offer quick gains by improving loss visibility and reducing setup time, with 5-8% OEE improvement and 10% faster changeovers. Asset reliability and shop-floor capability deliver medium-term gains by reducing downtime and strengthening loss ownership, with 35-45% less downtime and 3-3.5 OEE points through TPM. Material yield and structure engineering is a strategic lever focused on reducing material losses, with 20-30% lower trim waste (Exhibit 3). 

Together, these levers provide a phased path from quick OEE gains today to sustained, structural improvement over time.

Exhibit 3: Five horizontal levers across availability, performance & quality