Pune’s waste pickers, through Project Protoprint, sought to create a fully compliant, waste picker–owned plastic recycling unit.
The unit’s commitment to fair wages, environmental compliance, and circularity led to a loss of Rs 14.5 per kg of processed plastic.
By contrast, standard industry models that externalise labour and environmental costs showed marginal profit.
The findings raise questions about who bears the “true cost” of recycling in India’s circular economy.
Reforms are needed in Extended Producer Responsibility (EPR), taxation, and material design to make just recycling viable.
Project Protoprint, supported by SWaCH and the European Union’s Switch-Asia Programme, was an ambitious attempt by Pune’s waste pickers to move up the value chain by establishing and operating their own plastic recycling unit. Founded in 2007, SWaCH is India’s first waste picker-owned cooperative, providing door-to-door waste collection to over 900,000 households in Pune.
Bucking the mould of the industry’s preset typology — where, as Just Recycling (Kashtakari Panchayat, 2025) notes, recycling is divided into three categories: brand-led in-house units, venture capital–funded formal entities that target high-quality plastics, and informal units that prioritise volume over compliance — Project Protoprint set out to create something different. It aimed to establish a waste picker-owned, fully compliant, formal recycling enterprise that worked with mixed plastic streams (known locally as fuga), comprising post-consumer high density polyethylene or HDPE and polypropylene collected by the cooperative’s waste pickers.
The project’s goal was to demonstrate that high-value recycling at a micro scale could lead to better incomes and greater formalisation for waste pickers involved in aggregation and recycling. But as the project unfolded, it also exposed the underlying realities of India’s recycling industry — its blurred boundaries between the formal and informal, its operational inefficiencies, and, most revealingly, the hidden costs of recycling that most firms manage to avoid paying.
Being at the whims of the petrochemical industry, recycling is a game with razor-thin margins. Most enterprises are therefore forced to eke out profits by cutting corners wherever possible. These trimmed corners often mean not paying labour a fair wage or providing safe working conditions, avoiding Goods and Services Tax (GST), thus dodging a massive 18 per cent hit, and externalising environmental costs by not treating effluents and burning residual waste.
Protoprint, which processed over 20 tonnes of rigid plastic per month at its peak, did not follow these practices. Its 23 employees — 15 women and 8 men — were paid above-minimum-wage salaries with provident fund and Employee's State Insurance benefits. It had a functioning effluent treatment plant (ETP) and all the necessary state and central pollution control board certifications.
Critically, unlike most recycling units, Protoprint integrated aggregation with its processing unit. This was done to prevent “cherry-picking” or the siphoning off of high-value, high-recyclability materials from mixed post-consumer waste streams. This principle ensured that the model remained true to circularity and inclusive of the waste pickers and their mixed waste streams, where fuga or mixed rigid plastics amount to around 45 per cent of Pune’s waste pickers’ monthly earnings from plastics.
Beyond creating 23 formal “green jobs” and supporting waste picker livelihoods during periods of global plastic market slowdowns, Project Protoprint also provided rare insight into the economics of recycling. Data from the cooperative scrap shops in Pune show that fuga prices dropped by about 35 per cent, from Rs 25-28 per kilogramme (kg) to Rs 17-18 per kg in 2024-25.
Yet, despite these fluctuations, the project enabled us to decouple aggregation from recycling and scale our data to project costs for a “typical unit”, one that purchases raw materials in the form of flakes and functions on a standard 24-hour, three-shift model. This table highlights these costs.
Operating 12 hours a day across two shifts, the unit incurred losses of Rs 14.5 per kg, making it impossible to be financially independent. The structural unviability of a material-agnostic integrated recycling unit under current market conditions was no doubt exacerbated by our Quixotic endeavour to maintain the integrity of all compliance-related processes and by macroeconomic forces far beyond our control. On the other hand, our projections show that the disaggregated flake-procuring model makes a profit of Rs 0.7 per kg, even at conservative prices.
This does not vindicate the disaggregated model. Instead, it raises pertinent questions about the curious disappearance of the Rs 14.5 per kg and who exactly bears the responsibility for these costs or the true costs. We believe that recycling-only models improve the economics of production not through raised operational efficiencies, but by externalising the costs of collection and sorting onto waste pickers, scrap shops, and aggregators who currently enable the bulk of material flows in precarious conditions without recognition or policy support.
Such a trajectory risks hollowing out the base of the sector. The challenge, therefore, is not just about making recycling units financially sustainable, but about ensuring that the broader chain of collection, aggregation, and the workers embedded within it also remains viable.
As shown above, the market does not reflect the true social and environmental costs of recycling — operations that pay fair wages, comply with pollution norms, and process all incoming waste. If circularity is to move beyond rhetoric, the costs of compliance must be internalised within producer responsibility frameworks. For recycling to be just, it is critical that policy frameworks address material design, compliance, and demand creation, while also holding plastic producers accountable for the life-cycle impacts of plastics.
1. Financing the true cost of recycling
Recycling today operates at a loss because the market price of recyclate depends on the price of virgin plastics rather than the true costs of recycling safely and fairly. EPR must therefore evolve from a token compliance mechanism into a financing framework that closes this gap. Producer contributions should reflect the real costs of compliant recycling, which includes fair wages, safe working conditions, and environmental compliance. It must also extend to difficult-to-recycle plastics.
Considering that a large section of the sector is informal, it is also critical to make EPR more accessible to these firms for any real impact. Further, linking EPR finance directly to the generation of demand for recycled content can stabilise prices and create predictability for responsible recyclers.
2. Taxation and informality
The 18 per cent GST on plastic scrap keeps the sector locked in informality. Thin margins make compliance unaffordable for most traders and aggregators, forcing them to transact in cash or issue false invoices, further distancing themselves from formal systems. Rationalising GST on recycled materials and waste trade would immediately lower the entry barrier to formalisation while increasing government revenues. If India’s circular economy is to include the informal sector, fiscal policy must stop penalising it.
3. Material design and producer responsibility
Material design determines recyclability. Twenty-seven per cent of inputs at Protoprint were unrecyclable due to additives, laminates, contamination, and heterogeneous material composition. This affected both labour efficiency and throughput. Policy focus must shift upstream to mandate recyclable, mono-material packaging, regulate the use of fillers such as calcium carbonate, and restrict additives that compromise recyclability or worker safety. Producers must bear the full cost of plastics, including their limited circularity.
4. Compliance
Compliance today is a first-mover disadvantage. We spent 15 months obtaining the necessary approvals and consents, specifically the Orange Category classification requirements. Regulatory clearances are slow and complex, leading to operational delays and financial losses. The recycling sector continues to be treated as a stepchild, particularly in light of the Blue Category announcements, which make compliance for even waste-to-energy plants far simpler than for recycling units.
The full report of the project details operational data and other insights.
Gandhar is a Project Executive at Kashtakari Panchayat working to strengthen and diversify waste pickers livelihoods in Pune. Views expressed are the author’s own and don’t necessarily reflect those of Down To Earth