Fuel shortage, rising costs threaten production of gloves, syringes and other medical supplies

Medical supplies

• Wadi Surgicals stops production after HPCL halts LPG supply
• West Asia conflict raises medical plastic and energy costs
• AiMeD calls for quicker GST refunds to avoid job cuts and shortages

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Manufacturing at Wadi Surgicals Pvt Ltd, a major producer of medical gloves in Andhra Pradesh’s Visakhapatnam, has ground to a halt after Hindustan Petroleum Corporation Ltd (HPCL) suspended LPG supplies five days ago.

The plant in the Andhra Pradesh MedTech Zone, which requires about 4,500 kg of LPG a day, is the latest casualty of the US-Israel war on Iran, which has hit oil and gas supplies.

“We have formally reached out to the concerned authorities and HPCL, requesting urgent restoration of LPG supply and priority allocation, considering the essential nature of the product being manufactured,” Wadi Surgicals co-founder and managing director K Anindith Reddy said.

The disruption follows a strike on the Ruwais Refinery in the United Arab Emirates — one of the world’s largest refining complexes — triggering volatility across the energy supply chain.

The Ruwais Refinery remains a critical source for crude and LNG to HPCL. These shocks are now filtering into India’s medical manufacturing sector.

The escalating conflict in West Asia has crippled energy markets, with the near-closure of the Strait of Hormuz choking off vital crude and gas supplies.

Double blow

Spiking raw material prices and energy shortage have hit the production of essential supplies such as gloves, syringes and catheters.

Rajiv Nath, forum coordinator of the Association of Indian Medical Device Industry (AiMeD), said the Iran war had led to a spike in critical input prices.

“The conflict has spiked input costs for medical-grade plastics by nearly 50 percent,” he said.

Medical-grade polymers, which account for more than 86 percent of hospital consumables, have been hit by a wave of domestic price hikes on essential raw materials like polypropylene and polyethylene.

A surge in energy prices has added to the pressure. Adani Total Gas Ltd (ATGL) recently notified industrial customers that gas drawn beyond 40 percent of their daily contracted quantity (DCQ) will now be billed as “excess gas” at Rs. 119.90 per SCM, effectively doubling power and heating costs for manufacturers dependent on piped natural gas for high-temperature processes.

Margin squeeze

The combination of raw material inflation and energy cost escalation is squeezing margins across for manufacturers, particularly for low-margin essentials such as syringes and catheters.

Nath, who is also the managing director of Hindustan Syringes & Medical Devices (HMD), said companies are holding prices for now by absorbing the shock but that might not be sustainable.

“At HMD, we are not going to follow our raw materials suppliers in opportunistic price gouging by raising prices steeply overnight. We will wait for price revisions only after low-cost, earlier purchased inventory is consumed,” he said.

The financial strain is further amplified by a persistent inverted duty structure — manufacturers pay 18 percent goods and services tax on inputs but charge only 5 percent GST on finished medical devices.

With working capital under pressure, AiMeD has urged the government to expedite GST refunds, warning of potential production disruptions and downstream shortages in hospitals. The association emphasises that delayed refunds threaten more than five lakh jobs and jeopardise India’s exports to the US and EU.