Indian Paper Industry Structure, Overview and Development

Indian Paper Industry Structure, Overview and Development

-Writing & Printing Paper demand is expected to increase 3-5% CAGR over the current demand by fiscal 2025.
-In the last five to seven years, an amount of over Rs 25,000 crore has been invested in new efficient capacities and induction of clean and green technologies
-Tissue segment to grow at robust 11-13% CAGR to 1.9-2.3 million tonne by fiscal 2027 from 1.3-1.5 million tonne in fiscal 2022
The Pulp and Paper Times:

India is the 15th largest paper producer in the world. Demand for paper products, including writing papers, printing papers, and specialty papers, has been steadily increasing. India accounts for about 5% of the global paper market. The market value of the Indian paper industry is expected to reach US$ 19.1 billion in 2033. The market value of the Indian paper industry is expected to grow from 2024 to 2033 at a CAGR of around 7.5%. 

With the increase in literacy rate, more and more students are entering the education system and the demand for notepads, textbooks and supplementary materials is increasing and giving a positive boost to the paper industry. The future growth trend of the Indian paper industry is also being driven by the increasing demand for corrugated and household paper products.

India’s paper industry is flourishing both within the country and globally, fuelled by an increase in global demand. This growth is driven by the lifting of pandemic-related restrictions and the prohibition of single-use plastics. 

Indian population is around 15% of world population but consumes only 5% of the total paper produced in the world. India’s growing FMCG sector and high spending in education coupled with growth in organised retail and demand for better quality paper as well as more health consciousness of people, etc., are triggering factors of growth prospects of Indian Paper Industry. The industry provides direct employment to 0.5 million persons, and indirectly to around 1.5 million. 

Most of the paper mills are in existence for a long time and hence present technologies fall in a wide spectrum ranging from oldest to the most modern. The mills use a variety of raw material viz. wood, bamboo, recycled fibre, bagasse, wheat straw, and grasses. In terms of share in total production, approximately 18% are based on wood, 73% on recycled fibre and 9% on agro-residues. The geographical spread of the industry, as well as market, is mainly responsible for the regional balance of production and consumption.

 The paper Industry holds immense potential for growth in India as the per capita consumption is one of the lowest at around 15-16 kg, which is way behind the global average of 57 kg (200+kg for developed countries). India is the fastestgrowing market for paper globally and it presents an exciting scenario; paper consumption is poised for a big leap forward in sync with economic growth. The futuristic view is that growth in paper consumption would be in multiples of GDP and hence an increase in consumption by one kg per capita would lead to an increase in demand of 1 million tonnes. Healthy demand for printing and writing paper and firm realisations are further expected to drive growth for paper manufacturing companies.

Writing & Printing Paper demand is expected to increase 3-5% CAGR over the current demand by fiscal 2025. Enrolment of students (schools as well as higher education) is expected to increase at a relatively faster pace of 1.5-2% CAGR over the next years. Also, with the New Education Policy coming to effect and a gradual rise in education spend by the government, alongwith an increased thrust on education (through initiatives such as Sarva Shiksha Abhiyaan/Education for All) are expected to support demand for creamwove and maplitho paper. Specialty paper demand, primarily driven by Tissue paper, is expected to continue to log a robust 11-12% CAGR over the current demand to fiscal 2025. Demand for copier paper (20% of the W&P segment) is expected to increase at 7-9% CAGR through fiscal 2025, primarily on account of moderation spends on stationery by corporates due to focus on digital- based communication. Demand growth for coated paper is expected to remain moderate at 3-5% CAGR through fiscal 2025.

Demand for specialty paper is expected to increase driven by strong demand for tissue paper. Over fiscal 2023 to fiscal 2025, it is expected this segment to grow at robust 11-13% CAGR to 1.9-2.3 million tonne by fiscal 2027 from 1.3-1.5 million tonne in fiscal 2022. The main varieties of specialty paper are tissue, decor, thermal, fine printing, cigarette, and business card paper. Rise in urbanisation, emphasis on hygiene through increased government thrust (via initiatives such as Swatch Bharat), and steady rise in healthcare and hospitality demand will lead to rise in demand for tissue paper consumption. Moreover, rise in the number of cashless transaction (ATM, debit/credit card purchase, etc.) and increased billing (owing to rise in share of organised retailing) will boost demand for thermal paper.

In the last five to seven years, an amount of over Rs 25,000 crore has been invested in new efficient capacities and induction of clean and green technologies. The industry size of single-use plastics is estimated to be INR 10,000 crore. This move by the government will benefit all Indian paper mills to flourish their business. In India, only 15% of total paper and paperboard production is made from recycled materials, compared to a global average of 30% to 85%. As a result, there is a lot of potential for recycling in the paper industry.

About 50% of global paper demand is in Asia of which India is the fastest growing market in the world expected to grow at about 4% to 5% compound till at least 2030. According to various studies, the consumption of paper and board in India is expected to grow to over 35 million tons by 2035 from approximately 22 million tons presently. Now there are several drivers for growth of the Indian paper industry. Greater emphasis on education and literacy by the government coupled with the growth in business and commerce and demand for better quality paper by environmentally conscious consumers are the major drivers in the writing and printing segment.

According to the IPMA, paper consumption in India will likely reach 30 million tonnes by March 2027. There is growing demand from sectors such as FMCG and retail for innovative packaging solutions as they reduce dependency on plastics. Paper stocks can also benefit from the rising e-commerce shopping as well as ready-to-eat and packaged foods. 

Projections indicate a 6 to 7% annual growth in paper consumption in India, reaching 30 million tonnes by FY 2026-27. The growth is likely to be attributed to a focus on education and literacy, coupled with the rise in organised retail.

The above report has been extracted from Kuantum Paper’s annual report for FY 23-24
 

Web Title: Indian Paper Industry Structure, Overview and Development