Source: Ministry of Commerce website
Export value in USD millions

Paper, Paper Board & Paper Products

Paper and Paper Products Industry in India

Paper industry is an agro-based industry and it includes enterprises that make pulp, paper, paperboard, and other cellulose-based goods from wood as a raw material. It is an important and essential industry for any country, and per capita paper consumption can be used to track growth and advancement in areas such as economic progress and focus on education.

History and Present of Paper industry

  • In the 13th century, a captive monarch, Sultan Zainul Abedin, in Samarkand brought papermakers with him to Kashmir, India. In 1417–57 AD, he founded India’s first paper producing enterprise.
  • Subsequently, in 1812 the first paper manufacturing machine in India was built by William Carey at Serampore, West Bengal. In 1832, the first Fourdrinier paper machine was established at Serampore, West Bengal. It is a pre-colonial city on the west bank of the Hooghly River in Kolkata. However, shortages of demand resulted in its shut-down. The second mill was set up in 1870 at Ballygunge, Kolkata and India’s oldest and core paper industry was Dyed in the Wool.
  • Since the implementation of the New Indian Economic Policy in 1991, paper usage in India has increased steadily along with the country’s GDP (Gross Domestic Product). The consumption of paper in India increased from 8.5 million Tons in 2011-12 to 13.05 million tons in 2016-17. This sector is predicted to continue expanding in India as a result of rising domestic demand, a flourishing manufacturing sector, growing upstream market for paper products like tissue paper, filter paper, tea bags, and lightweight online coated paper, and higher demand for better quality packaging from organized retail outlets. During the last decade, from 2012-13 to 2022-2023, India’s paper consumption registered CAGR (Compound Annual Growth Rate) of 6 per cent compared to the global growth of 3 per cent making India one of the fastest growing paper producers in the world. India’s part of global paper demand is rising as domestic demand rises steadily and western demand falls. Indian paper demand increased from 9.4 million tonnes in FY 2008 to 15.4 million tonnes in FY 2016. Despite the industry’s rise, per head paper usage in this country is just over 14 kg, far below the world norm of 57 kg and North America’s 200 kg.
  • As compared to the newsprint consumption, which has declined slowly and marginally, production and imports of the newsprint material has declined drastically in the past decade. As per Indian Newsprint Manufacturers Association (INMA), the annual demand for newspaper in India is approximately 2.2 million tonnes, but an overwhelming 68 per cent of this demand (1.5 million tonnes per annum) is met by imports, 3 primarily from Canada and Russia. The interruption in supply chains and increases in prices stemming from the Russia-Ukraine war have exacerbated the situation.
  • Production, Imports, Exports, Consumption of Paper, Newsprint and Paper Products:
  • The proliferation of digital alternatives is expected to have contributed to a gradual drop in demand for writing and printing papers. The effects are readily apparent in production and consuming rates. Data suggests that production of paper (excluding newsprint) was down by 11.5 per cent on a year-on-year basis in 2017-18 and by 30.9 per cent in 2018-19. Consumption numbers also saw a similar trend as they fell by 16.4 per cent on a year-on-year basis in 2017-18 and by 35.1 per cent in 2018-19 (CMIE, 2022).
  • The paper output increased by 67,100 tonnes in January 2023, i.e., output rose 12.5 per cent to 604,300 tonnes. During April 2022-January 2023, Paper output rose 6.7 per cent. The production reached 5,553,900 tonnes in the ten months ending January 2023. The production of paper products rose by 11.1 per cent in November 2022 over the production in November 2021. The month made ₹ 12,892 million via paper products. In April–November 2022, paper product output increased by 24.4 per cent. The eight-month production worth was ₹ 107,909 million that ended in November 2022. Early results of the paper products industry indicate a 4.5 per cent y-o-y growth in sales revenues in the December 2022 quarter (CMIE).
  • Indian paper output ranges from 5 TPD (tonnes per day) to 1650 TPD and is regionally distributed and highly fragmented, consisting of micro, small, medium, and large-scale paper mills.
  • Plant size classification goes like this:
    • Micro units – below 50 TPD,
    • Small units – 50 to 150 TPD,
    • Medium Units – 150 to 300 units,
    • Large Units – Above 300 TPD.
  • Scale wise distribution of Paper Units in India.
    Name of State Large Units Small Units Medium units Micro units Total units
    Andhra Pradesh 4 11 7   22
    Gujarat 10 62 16 23 111
    Himachal Pradesh 1   1 1 3
    Karnataka 1 8 5 5 19
    Maharashtra 3 17 7 21 48
    Odisha 2 1     3
    Punjab 4 19 4 12 39
    Tamil Nadu 7 32 9 22 70
    Telangana 1   1 2 4
    Uttar Pradesh 9 40 23 12 84
    Uttarakhand 2 14 14 3 33
    West Bengal 2 15 3 12 32
    Assam   2 2 2 6
    Chhattisgarh   1   5 6
    Haryana   2 2 2 6
    Jammu and Kashmir   1   1 2
    Kerala   3 1 5 9
    Madhya Pradesh   1 1 2 4
    Odisha   1   2 3
    Rajasthan   4   1 5
    Bihar       1 1
    Source: Census Survey of Indian Paper Industry

     

  • Gujarat is home to the highest amount of paper manufacturing facilities. However, most of these units are built from RCF. UP is home to the second highest concentration of paper mills in the country. These include one or two significant factories, the majority of which are located in the Muzaffarnagar and Meerut regions, respectively. The states of Tamil Nādu, Andhra Pradesh, and Maharashtra are home to the majority of the country’s largest mills. The cities of Muzaffarnagar, Kashipur, Coimbatore, and Ahmedabad, are all home to significant concentrations of paper and pulp factories.

Industry Challenges

Raw Material Shortage: The Indian paper industry is highly dependent on the availability of raw materials such as wood, bamboo, and bagasse. Any shortage or price fluctuations of these raw materials can adversely affect the industry’s operations and profitability. Due to extreme insufficient supply and high input costs, the Indian paper market is in an untenable state. The increase in production costs, logistics, chemicals, and raw materials has compelled paper mills to set new price records. Given the pandemic and Ukraine war, the entire paper business community turned mindful of the supply chain scenario for 2023, even though it may be difficult to predict the world cargo trend for the future. The coal prices have also been impacted by Indonesia’s decision to curb exports. The issue of a conspicuous shortage of basic raw materials together with their high cost has aggravated the pressure on the margins and the unviability of the operations in some cases also led to the closure of mills. The gravity of the situation is reflected in the fact that at present the cost of procuring wood in India is more than $100 per tonne whereas the same in other competing countries that have advanced paper manufacturing is $60 per tonne.

 

Environmental Challenges: The paper industry is a significant contributor to environmental pollution, and therefore, it is subject to stringent environmental regulations. Many environmental issues, such as climate change, human toxicity, Eco toxicity, photochemical oxidation, acidification, nitrification, deforestation and solid refuse production, are exacerbated by this resource- and capital-intensive nature of this business. Though Paper industry in India is an agro-based industry and it includes enterprises that make pulp, paper, paperboard, and other cellulose-based goods from wood as a raw material can be classified under Manufacturing as well as Agricultural sector. And both these sectors produce the most greenhouse gases (GHG) combined. Since the pulp and paper industry in India is largely considered as a polluting and non-sustainable industry, concerted efforts have to be made to remodel the industry with an accent on sustainability and renewable or recyclable raw materials. Towards this end, the Green Rating Project (GRP), undertaken by the Centre for Science and Environment, New Delhi attempts to examine the environmental impact in terms of raw material inputs, fiber sourcing, discharges and uses to formulate a holistic and broad-based criterion of environmental parameters factoring all these aspects.

 

Competition: The Indian paper industry is highly competitive, with several large and small players heavily concentrated in a single community. Price competition, coupled with increasing demand for high-quality paper products, can affect the industry’s profitability. Government policies related to tariffs, taxes, subsidies, and import/export regulations can significantly impact the paper industry’s profitability. Any adverse changes in these policies can increase the cost of operations and reduce the industry’s competitiveness. The challenge of restraining indiscriminate shipments of paper from China and other ASEAN countries is one that will never go away completely. The paper manufacturers in China and other ASEAN countries not only have access to low-cost supplies and raw materials, but they also receive assistance and incentives. Because of this, it is impossible to provide

Indian manufacturers with an equal playing field in the internal market. The Indian paper industry’s competitiveness on the fronts of cost and quality has come into a sharp focus as a consequence of the advent of a globalized economy leading to reduced protectionist measures and the inculcation of FTAs (Foreign Trade Agreements) with burgeoning bordering economies.

 

Technology: The paper industry is constantly evolving, with modern technologies and processes being developed to improve productivity, efficiency, and quality. Failure to keep up with these technological advancements could result in a competitive disadvantage for the industry players. The lack of indigenous manufacturing capabilities for plant and machinery is one of the many challenges that the industry face. Nearly 36 per cent of the paper production comes from the forest based raw material and the remaining from the non-conventional raw material, like agro residues and wastepaper. At present 73 per cent (14.75 million tons of the production) comes from the RCF sector. In the face of pollution problems, many small/medium agro-based mills, which could not afford chemical recovery switched to using RCF for paper making.

The vast majority of paper mills in India employs obsolete technology. Due to the industry’s complex structure, the mills’ technology and apparatus vary in accordance with their scale of operation and raw materials. This has not only a negative impact on the product’s quality and price, but also on the environment, as outdated technologies are frequently less efficient and more polluting.

India’s Total Trade for Books & Publication during 2022-23

  • India’s total trade for Paper & Paper Products have reached to US$ 8272.15 million during 2022-23. India’s exports of Paper & Paper Products are US$ 3023.3 million during 2022-23.  Imports of Paper & Paper Products into India have reached to US$ 5248.85 Million in 2022-23.

  • The major markets for India to export Paper & Paper Products are UK, USA, UAE, Sri Lanka, Nepal etc.

In the future, the industry is expected to make a significant contribution to the Government’s goal of reaching an overall increase of 8 per cent in manufacturing.

There is an urgent need to make the business more viable and effective overall by consolidation, economies of scale, modernization of mills, quality benchmarking, greater competitiveness, and greater compliance with environmental and regulatory norms. Of late, there has been a significant level of investment from the paper industry in areas such as technology enhancement, capacity expansion, and, more recently, in corporate social responsibility (CSR) initiatives. Several initiatives have been implemented to address the shortage of raw materials, including shifting from bamboo to eucalyptus, wattle, and 15 mulberry wood, recycling the fiber, and making paper production environmentally favourable. As bamboo cultivation has become unprofitable, unorthodox raw materials have been utilized.

The Indian paper industry is in a good position compared to western industry leaders. The Indian paper industry has trained personnel at all levels, and therefore, it is able to produce high-quality paper with appropriate technology at relatively low labour costs, relative to the West. The paper industry’s growth is expected to be sustained over the medium term because of 15 kg per capita consumption, economic growth, and structural transformation, transforming demographics, thrust on education and literacy by the Government, increased corporate activity and lifestyle changes and rising demand for improved quality paper.

Technological innovation is a pre-requisite to the development of the paper industry. Hence, there has been investment in plantation R&D leading to the development of high-quality tree clonal saplings, which are disease and drought resistant and can be grown in a variety of agro climatic conditions. Technical extension services are being imparted to the farmers over a gestation period of 4-5 years to improve agro / farm forestry output. But it also needs a substantial capital investment from private actors, which is not always readily available. As an outsize proportion of bagasse is used as fuel in the sugar industry and is unavailable to the paper industry, its prudent use should be encouraged. Sugar refineries should be encouraged to use coal-fired furnaces rather than bagasse-fuelled ones. The Bagasse is utilized for each of the major categories of paper, including packaging and cartons, printing and writing, photocopier paper, tissues, newsprint, etc. As a major sugarcane producer, India has enormous potential in this regard.

Further, the ban on the sale of some types of wastepaper for environmental reasons will drive players to reclaim more local wastepaper. This needs serious thought, but there are no national efforts to boost home wastepaper salvage, except for a few firms and groups. In sum, there are diverse forces and factors playing out in the paper industry. The demand for newsprint papers and printing writing has plummeted because of the winds of change and the inexorable forces of digitization, there have been tailwinds for the paper industry in general and the packaging paper segment in particular with ascendant demand for packaging from e-Commerce, food, and food products, FMCG and the pharmaceutical sector.

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