Specialty paper and packaging industry overview | Indian paper industry overview

Specialty paper and packaging industry overview | Indian paper industry overview

- India’s growing FMCG sector and high spending on education as well as more health-conscious people etc are catalysing factors of growth prospects of the Indian paper industry
- The Indian food and beverage packaging sector is witnessing significant growth, with the market value expected to expand from US$ 33.73 billion in 2023 to US$ 46.25 billion by 2028.
- A rebound is anticipated in FY2025. This rebound, estimated at 6-9%, is expected to be driven by the commercialization of ongoing and incremental capacities, especially in the packaging segment and improving demand conditions.

The Pulp and Paper Times

Global specialty paper and packaging industry overview

The global specialty paper market size is forecast to increase by US$ 13.59 billion, at a CAGR of 5.09% between 2023 and 2028. Speciality papers are often used for specific applications such as packaging in food, pharma and hygiene segments, labels, printing and crafts etc. The specialty paper market is influenced by factors such as technological advancements, environmental concerns, and evolving consumer preferences. The global paper and paperboard packaging market size is estimated at USD 398.65 billion in 2024. It is expected to reach USD 501.08 billion by 2029, growing at a CAGR of 4.68% during the forecast period (2024-2029). The sustainability packaging market is a growing segment within the larger packaging industry, driven by increasing consumer demand for eco-friendly and sustainable packaging solutions. The speciality papers having lower Grammage (lightweight), eco-friendly, and cost-effective nature of paper packaging significantly contributes to its market growth. Moreover, growing consumer awareness regarding the adverse environmental impacts of plastic has further contributed to the demand for paperbased flexible packaging worldwide. Furthermore, domestic industries like e-commerce, food delivery services, etc., would continue to grow, and so will the consumption of speciality paper products with barrier properties against oil, grease etc. The growing urban population, developing e-commerce package industry and improving population awareness about environment-friendly packaging are expected to fuel growth in the speciality segment. (Source: Statista, Technavio, Mordor Intelligence)

Indian paper industry overview

The Indian paper industry, estimated at around INR 80,000 crore, plays a significant role in the country’s economy. With an annual paper production exceeding 25 million tonnes in FY24, the industry has been a key contributor to employment, directly employing about half a million people and indirectly supporting another 1.5 million. However, despite a promising start in the first half of FY24, the industry faced challenges in the later half, primarily driven by a global downturn in demand. 

Despite its scale, the Indian paper industry remains fragmented, comprising small, medium, and large mills producing various paper types. 

During the first six months of FY24, the industry witnessed robust growth. However, the scenario shifted in the latter half as paper prices underwent significant corrections due to subdued global demands. 

The industry’s challenges were further compounded by a surge in paper imports, which increased by 43% in volume terms during 2023-24, notably driven by a significant rise in imports from ASEAN countries. 

Amidst these challenges, the Indian paper industry advocated sustainable growth practices to secure its future. This included emphasis on the adoption of renewable energy sources, energy efficient technologies, energy audits, carbon reduction targets, and investment in research and development to foster energy conservation and environmental sustainability.

While the industry’s revenues were expected to contract by 7-10% in FY2024 due to pricing corrections and modest volume growth, a rebound is anticipated in FY2025. This rebound, estimated at 6-9%, is expected to be driven by the commercialization of ongoing and incremental capacities, especially in the packaging segment and improving demand conditions.

Indian specialty paper and packaging industry overview

The Indian paper and paperboard packaging market was pegged at US$ 12.87 Billion (Rs. 1,07,485 crores) in 2024 and is expected to reach US$ 17.74 Billion (Rs. 1,48,158 crores) by 2029 , growing at a CAGR of 6.63%. The packaging paper segment accounts for 55% of sales in India, followed by writing and printing (W&P) paper at 30 per cent. The rest is with newsprint and speciality paper. India’s growing FMCG sector and high spending on education as well as more health-conscious people etc are catalysing factors of growth prospects of the Indian paper industry; particularly the packaging industry in India is expected to grow at 12-15%.

The Indian writing and printing and specialty paper market was valued at USD 2,660.00 million in 2021 and is expected to reach USD 4,502.48 million by 2029, registering a CAGR of 6.80 % during the forecast period of 2022 to 2029. Specialty papers are superior-quality papers, designed for specific purposes that possess specific features and properties, along with proficiency in print technologies and design. The specialty paper market is segmented by application such as packaging and labeling food service, printing and publication, building and construction. (Source: Invest India, Business standard, Mordor Intelligence)

There are other major segments where speciality papers are used such as Tissue and Hygiene, Food & Beverages, Pharma etc. The Indian tissue and hygiene paper segment is expected to generate a revenue of USD 40.6 billion in 2024 with the household paper accounting for the largest share at USD 11.59 billion. This growth is attributed to increasing awareness around hygiene among the population in the aftermath of the pandemic. The tissue paper market is segmented mainly into paper napkins, toilet paper, facial tissues, Towells and other tissue-based products. (Source: Statista, Research and Markets)

The food and beverage sector encompasses containers, cups, tableware, straws, bags, wraps, and boxes designed to protect or enclose food items. Food packaging involves enclosing food products to safeguard them from contamination, spoilage, damage and pests during storage, transportation, and retail sales. It also protects food from various environmental factors such as heat, light, pressure, humidity, and microbes.

The Indian food and beverage packaging sector is witnessing significant growth, with the market value expected to expand from US$ 33.73 billion in 2023 to US$ 46.25 billion by 2028. The demand for the food packaging industry is driven by essential benefits such as product protection, portability, and convenience. Speciality paper products play an important role by providing paper based solutions having adequate barrier. (Source: Trade Promotion Council of India)

The pharma packaging companies is segmented by material type (plastic, glass, and other material types (paper and paperboard, metal), product type (bottles, vials and ampoules, syringes, tubes, caps and closures, pouches, labels and other product types).

The Indian pharmaceutical packaging market size is expected to reach USD 17.84 billion in 2024 and grow at a CAGR of 13.30% from 2024- 29 to reach USD 33.32 billion in 2029. The demand for pharmaceutical packaging industry is directly dependent on the pharmaceutical industry demand. Speciality paper products provide an environmentally compatible and sustainable solutions for some applications in Pharma segment.

Overall, the speciality paper market in India is expected to grow both in terms of volume and quality which will include barrier paper grades in future.

Environmental impact: Plastic vs. Paper Packaging

Paper has come into the limelight due to a ban on the use of Single Use Plastics (SUP) though it is yet to be fully implemented across the country. Paper-based packaging has many advantages over plastics and can replace plastics in various applications.

Paper is recyclable in industrial conditions and decomposes naturally in the environment while plastics recycling presents technical and financial challenges. Plastics contributes significantly to global plastic waste. Their decomposition process is slow and they pollute aquatic ecosystems and soil. It also impacts wildlife health and ecosystems due to ingestion and entanglement.

Paper-based packaging is derived from renewable raw materials which make it biodegradable. It can be recycled multiple times without losing main properties. It decomposes naturally, aiding in environmental sustainability. Plastic packaging on the other hand is non-biodegradable and may persist in the environment for a large number of years. Paper-based packaging scores over plastics in the area of reusability and durability. (Source: Mordor Intelligence, Invest India)

Various industries are embracing sustainable packaging solutions to reduce their environmental impact and meet the growing demand for sustainable products from the consumers. These include Food and beverages, Pharma and cosmetics etc. The materials used are bio plastics etc and paper based packaging solutions. The brands are adopting innovative packaging designs such as pouches, bags, and boxes that use fewer materials and are easier to transport, reducing the overall environmental impact.

Growth drivers

The market size of India is large and growing due to its rising population. Indian household income has doubled over a decade, signifying a rising disposable income. India’s urban population is expected to double during 2018-2050, catalysing demand for better living standards, hygiene, healthcare etc. India’s consumer market is set to become the world’s third largest by 2027, two places above its current fifth position, as the number of middle to high-income households rise. 

Conducive government policies such as production-linked incentive schemes, Ayushmaan Bharat and other industry-specific initiatives further contribute to the demand growth for packaging.

India’s e-commerce market is expected to extend past $160 billion by 2028, from an estimated $57–$60 billion in 2023, strengthening the packaging industry. (Source: Deccan Herald, Times of India, CNBC)

The above report on specialty paper and packaging industry has been extracted from Pudumjee Paper Products Limited’s Annual Report 2023-24
 

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