2021: The year that was
The year 2021 was pretty topsy-turvy for the paper industry. The industry was recovering from a severe economic downturn due to the first wave of the pandemic, till the second wave hit the country in April 2021. The dip in the performance of the paper industry on account of the second wave though was not as severe as during the first wave in April/May 2020 due to the lockdowns and restrictions imposed at that time. After some recovery, the industry was again adversely impacted by the Omicron wave from November 2021 onwards due to a fall in the sentiment.
Although the performance of the paper industry has been significantly impacted by the pandemic, there were also some positive developments. Notwithstanding domestic and global headwinds, India’s exports of paper, paperboard, and newsprint outstripped imports, in volume terms, for the first time ever in FY 2020-21.
The tree cover in the country has increased over the years as brought out by the India State of Forest Report 2021 and the paper industry has been playing an important role in the Greening of India. After the investigation and recommendation of the Directorate General of Trade Remedies (DGTR), anti-dumping duty was imposed by the government on the import of décor paper from China for five years.
2022: The year that will be
Raw material, energy, and input costs, including chemicals, for the paper industry, jumped significantly during the year impacting the commercial viability of many paper mills. Coal shortages that plagued the industry during most of the year are still continuing. Shortage of containers and high ocean freight rates are expected to continue for some more months at the very least. Continued closure of educational institutions, and also of offices and commercial establishments with emphasis on work-from-home, has adversely impacted several segments of the paper industry, especially the writing & printing segment, during FY 2021-22. The performance of the paper industry as a whole should be better in FY 2021-22 as compared to FY 2020-21, although the industry is still not at the pre-COVID levels.
With the massive vaccination drive in the country, and the pandemic hopefully abating to a significant extent in the coming months, we are expecting a much better performance of the industry in FY 2022-23.
The goal for the paper industry should be to enhance its cost competitiveness and product quality. The paper industry also needs to move up on the sustainability curve and reduce its environmental footprint over time by focussing more on energy efficiency, resource conversation, adoption of clean and green technologies, etc. It also needs to work towards securing assured supplies of raw material.
Also Read: 2022: Trends Transforming the Paper Industry
Key trends driving the growth
As the economy picks up after two difficult years, we expect demand for better quality packaging of FMCG products, booming e-commerce, rising healthcare spending, growth in pharma, packaged foods, and textile sectors, etc. to lead to increased demand for paperboard/packaging paper. The reopening of educational institutions across the country should revive the demand for the writing & printing segment. Implementation of the National Education Policy (NEP) 2020 in the coming months should also significantly contribute to the demand for writing & printing paper. Hopefully, with the pandemic situation improving, demand for all paper grades will show a positive trend and surpass the pre-COVID levels during this year.