Mumbai is the largest Indian city to enforce the ban, joining a handful of countries such as Kenya and Rwanda to introduce jail time for using plastic bags. Brought in by the state government of Maharashtra - home to 110 million people - the ban has a huge potential to reduce India's 26,000 tonnes of daily plastic waste.
"Plastic is like a demon, we all must come together to kill it," Maharashtra's Environment Minister Ramdas Kadam said on Monday.
The push towards reducing plastic is part of a national effort in India to clean up its cities and towns. In June, Prime Minister Narendra Modi called on world leaders to curb environmental degradation and plastic pollution.
"Plastic now threatens to become a menace to humanity. A lot of it never makes it to the recycling bin. Worse, a lot of it is non-biodegradable," he said.
Bollywood stars have chimed in too, using their social media accounts and appearing in government advertisements to discourage plastic usage.
However, critics say the ban will affect small retailers and businesses the hardest. Small roadside businesses and market vendors rely on plastic bags to package items.
Viren Shah, president of the Federation of Retail Traders Welfare Association told the Mumbai Mirror that 300,000 small businesses in the city had experienced a drop in sales of about 50 per cent since the ban, and there was confusion about which plastics were allowed and which were not.
He said about 2000 small shops were forced to close over the weekend and huge quantities of perishables - such as milk, yoghurt and juice - were wasted as retailers feared being slapped with penalties.
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Shah said the small business owners were tallying up their losses and might go on strike on Wednesday until the government heeds their concerns.
"We had written letters to the government stating all grocery stores would buy back the recyclable plastic from the customers at 2 rupees [4¢] but these suggestions were not taken [up]," he said, the Hindustan Times reported.
Residents and businesses in Mumbai were given a three-month period starting in March to phase out the use of plastic bags and to find sustainable alternatives instead.
Plastic is the latest target in Modi's Clean India program, which also aims to tackle India's huge sanitation and public cleanliness problems, through vast public awareness campaigns calling on citizens to pull up fellow Indians for littering or defecating in the open.
Some argue that the campaign has become overzealous and ill-mannered.
In one recent controversial incident, Bollywood actress Anushka Sharma shamed a Mumbai resident for littering.
"Why are you throwing plastic on the road?" she is seen asking, in a video posted online by her husband, India's national cricket captain Virat Kohli.
The man replied in a Facebook post, decrying Sharma's behaviour.
"The garbage that mistakenly went out of the window of my luxury car ... was way less then the garbage that came out from your mouth," he said.
The man has reportedly served the actress with a legal notice.
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