The Bright Paper Prospects

India is increasingly focusing on sustainable packaging solutions, with a significant focus on paper-based packaging. The country’s packaging paper and paperboard market stands at about 15 million tonnes, which is nearly 65 percent of the total paper, paperboard and newsprint market of 23 million tonnes.

As the world embraces green practices, businesses are leading the way in adopting effective paper packaging solutions that are not only eco-friendly but also practical and cost-effective, supporting market growth. India is increasingly focusing on sustainable packaging solutions, with a significant focus on paper-based packaging. Today, the country is the brightest spot in the global paper market with domestic consumption of packaging paper and paperboard growing at 8.2 per cent in 2023-24. The country’s packaging paper and paperboard market stands at about 15 million tonnes, which is nearly 65 percent of the total paper, paperboard and newsprint market of 23 million tonnes. According to a Mordor Intelligence report, the size of the segment is estimated at USD 15.96 billion in 2024, and is expected to reach USD 38.87 billion by 2029, growing at a CAGR of 19.48% during 2024-2029.

Factors and Opportunities
The growth can be attributed to soaring demand for better quality packaging of FMCG products, textiles, pharmaceuticals, as well as booming E-commerce and quick-service restaurant market. The ban on single-use plastic has also emerged as a key demand driver.

As consumers grow increasingly aware of the environmental ramifications of their purchases, they actively seek brands that prioritize sustainable packaging. Consequently, there has been a surge in the adoption of eco-friendly packaging materials, including biodegradable plastics, recycled content, and compostable substances. This has induced major FMCG players, apparel companies and pharmaceutical companies to make plastic reduction a key target. A Mordor Intelligence finding maintains that 75% of consumers prefer environmentally friendly packaging. With plastics accounting for 3.4% of greenhouse gas emissions globally, cutting their use in packaging is essential to global carbon emission reduction efforts.

The government’s move to ban single-use plastic has also opened the door of opportunities in India. The country produces a staggering 3.5 million pounds of plastic waste annually. While industries are still looking for ways to create novel products and eco-friendly alternatives to plastic, paper products have been proposed as a promising substitute. The emergence of E-commerce and quick-service restaurants as burgeoning markets in the country has also enormously contributed to the growth. The E-commerce packaging market in India is expected to reach a projected revenue of USD 15,844.2 million by 2030. It generated a revenue of USD 3,030.0 million in 2023, says Grand View Research. In terms of segment, corrugated boxes was the largest revenue generating product. Similarly, the signs for growth in the Indian quick-service restaurant market are both robust and clear, with the market expected to touch USD 38.71 billion in 2029.

Paper and paperboard manufacturers in India are implementing capacity expansion, de-bottlenecking as well as technology upgradation projects involving an investment of INR 25,000 crore, Naini Papers’ Pawan Agarwal was quoted recently. “A million tonnes in capacity will be added. But it’s not as much about capacity as the focus on modernisation, de-bottlenecking and replacing old technology. Around INR 5,000 crore of the investment will be on new technology to help lower carbon footprint,” the Indian Paper Manufacturers Association president’s words illustrate what’s at play in the industry.

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Products and Capacity
With a production capacity of 3,40,000 TPA and a dedicated 33.5 MW captive power plant, Emami Paper Mills Limited (EPML) manufactures multi-layer coated packaging boards, high-quality writing and printing paper, and premium newsprint. It claims to have mastered operational efficiency with the right technology and best product mix. Already present in three segments- newsprint, writing and printing paper, and high end both recycled and virgin grade packaging board – in the last two years EPML entered the speciality grades of paper like pharma print and oil and grease proof paper. It says that its recycled grade grey back is the only product available in the world which has top two layers of virgin pulp. “Our virgin grade board is known for its consistent physical and aesthetical properties and can be compared with any international standard, “says Soumyajit Mukherjee, the company’s Chief Marketing Officer.

Earlier, Genus Paper & Boards was producing around 10,000-11,000 tons per month from the Moradabad plant. “After acquiring the Muzaffarnagar plant, we are targeting production of 35,000 tons per month in the next one year. Now we have a capacity of 9,000 tons per month of duplex board and around 25000-26000 tons per month of kraft paper,” says Mr. Kailash Chandra Agarwal, its Managing Director & CEO. The company manufactures a white kraft liner in a variety of GSM and BF ranges. It also produces virgin top liners and caters to the premium segment along with lower GSM with high BF for carry bags and E-commerce packing. Many FMCG and FMEG, food, pharma and E-commerce players use its products to ‘fulfill their premium packaging needs’.

Another major player in the ring is ITC’s Paperboards and Specialty Papers Division (ITC-PSPD), catering a wide range of packaging and graphic boards, accompanied by a diverse range of fine papers and specialty papers fulfilling a variety of needs. “From high-quality FBB and SBS boards, to liquid packaging boards, cigarette boards, playing card boards, top-liners, C2S boards, recycled boards, solid boards, we cover almost the entire spectrum of paperboards,” the company informs. Its bandwidth of products has increased continuously; in recent times, it has been able to leverage R&D capabilities to launch several paperboard alternatives to single-use plastic. Our ‘Filo’ series of sustainable paperboards has gained significant traction in the industry, both in India and abroad, it says. “These are ideal replacements to single-use plastic and LDPE-coated packaging/disposables in the F&B industry.”

In order to enhance operational efficiency and ensure faster service to customers, JK Paper has established Quality Service Centers (QSCs) at Chandigarh and Bengaluru. Earlier, the company was only producing SBS and FBB grades. It now manufactures a wide range of products, including cup stock, specialty grades and sustainable board grades. Over the years, the company has come up with customized solutions for various application and developed products like antifungal board, for soap packaging, sustainable solutions to replace plastic-based packaging, such as aqueous-coated boards, bio-PBS-coated boards, liquid packaging board and other specialty grades like cigarette packaging board and induction wad.

Applications
JK Paper says that its products have a highly smooth surface, excellent shade consistency, superior strength, and exceptional quality for various printing applications such as offset, gravure and flexo. Some of its best performing products include JK Ultima, JK Platina, JK Tuffcote, JK Ivory Board, JK Tuffpac and JK Endura. They offer high value in terms of strength and optical properties. Their exceptional runnability for machine-filled cartons makes them an ideal choice for customers. These products are used in FMCG, food packaging, pharmaceutical, consumer durables, textile and several other industries.

In packaging boards, there is a spectrum of usage from pharma, FMCG, readymade food, agarbatti, readymade garments, imitation jewelry, confectionaries, hosiery, etc, Mr. Mukherjee says. He concurs with many that the food packaging segment is growing very fast in the country.

“Our products are widely preferred in sectors such as FMCG, electronics and electrical appliances, automobiles, pharmaceuticals, textiles and apparel, agarbattis, edible oils, matches, and fireworks,” says Mr. N. Rama Mohan Murali, Senior Vice President – Operations, Sripathi Paper and Boards Private Limited. “We are observing a growing demand in the E-commerce and food segments and have strategic plans in place to develop products that meet the specific needs of these end-user applications.”

For Khanna Paper, significant usage of its products are in the FMCG sector, for the mono-cartons or secondary packaging, says Mr. SVR Krishnan, its COO. Though the packaging demand has come down a bit in the recent past , the COO believes that with the E-commerce and Q- commerce booming he expects the growth rate will be steadily increasing in the coming year. As the Indian economy is still at a better pace compared to many countries, we are optimistic that the paper and paperboards would play a very pivotal role in the educational , cultural and packaging segments, he stresses. “The stronger demand is emerging in the food packaging segments, with the growing urbanization and less and less free time available for the working class youth , RTC and RTE food packaging are in great demand. Also, with the stringent regulations, in many of the states and countries, on the single-use plastics and plastic laminates, there is a good potential for the barrier-coated and treated paper and board substrates for food courts and fast food joints.” He goes on to share that the company is keeping a close tab on the developments and will be coming out with the most suitable alternative for the sustainable packaging substrate, based on the treated recycled fibers.

Also Read: ITC-PSPD Rolls Out ‘Sign-Up Green’ Solid Board Focusing on Sustainability and Green Technologies

Clientele
Sripathi Paper and Boards supplies nearly 20% of the total recycled board requirements in South India, establishing itself as a significant player in the recycled space. Its success in launching new products for existing customers has helped the company retain and expand its share of business with them, says Mr. Murali. Geographically, the company has been expanding its client base by adding new customers from different parts of India and abroad. Currently, 15% of its total sales are exported to countries, such as Sri Lanka, Bangladesh, the Middle East, Africa, and some European nations.

Khanna Paper’s clientele list features renowned printing and converting houses like Khemka, TCPL, Parksons and ITC, etc and it does the conversion jobs for the end clients like Nestle, Britannia, Hindustan Unilever and ITC for packing their end products. Its FMCG portfolio has grown by 12-15% in the last 4-5 years.

Sustainability
Through its Social Farm Forestry initiative, JK Paper, which has its own R&D for plantation, provides sapling to farmers to cover over 30,000 hectares of land. This ensures enough availability of raw material without ‘harming a single natural forest tree and aids carbon sequestration’. Along with sustainability, it has taken many steps towards energy conservation and for better waste and water management, which include the reduce, recycle and reuse method. Around 50 percent of its power needs are met through renewable resources.

Focus on sustainability has enabled ITC-PSPD to develop a renewable wood-based value chain leading to substitution of some grades of imported pulp, contributing to ‘Make in India’. Its sustainable paper value chain has also led to extensive afforestation, cumulatively greening over 1 million acres and generating over 210 million person-days of employment last year alone, in addition to large-scale carbon sequestration. “We have also made several significant investments in the area of Green Technologies, the latest one being a state-of-the-art High Efficiency Recovery Boiler at Unit Bhadrachalam. The Boiler boasts of a high energy-to-renewable fuel ratio and sets a global benchmark in emission standards, saving substantial amounts of coal and increasing our share of renewable energy to 51%,” it says. In the area of solid waste management, it says recycling and reusing plant wastes have helped improve specific waste generation for each of our manufacturing units.

Highlighting its tagline, ‘Proud to be Green’, Mr. Krishnan says, “Our every capex initiative and the new plan is taken up by keeping the environmental sustainability, business viability and continuity in mind.” In Khanna Paper, he adds, nothing is called as waste, everything is a by-product for making some other useful products for the society. “We recycle almost 80% of the processed water in the plant operations. We use 100% of our solid waste or sludge internally by installing a sludge dryer plant of 200 TPD.”

In Muzaffarnagar, we are maintaining around 10 ponds in nearby areas for natural recharging of water, says Mr. Agarwal. “The ponds are acting as a carbon sequestering agent also. In terms of environmental emissions and other processes, Genus Paper & Boards is very much intact with the norms and follows them well.” Manifesting its belief in circular economy, the company follows all biodegradable as well as environmental social governance norms. We are playing a very positive role in the protection of the environment and planet both, he adds.

Sripathi Paper and Boards asserts that its commitment to minimizing environmental impact is evident in our water consumption practices, ‘where we have achieved one of the lowest rates in the industry at 1.7 cubic meters per metric ton’. This efficiency is achieved through advanced water recycling methods and proper treatment processes. Additionally, it has integrated high-efficiency vacuum pumps and turbo blowers into operations, significantly reducing energy consumption. As part of its sustainable energy efforts, solar and wind sources contribute 13% to our overall energy consumption, while biomass accounts for 35% of our fuel usage. These measures not only contribute to our sustainability goals but also ensure that we operate in an environmentally responsible manner, minimizing our ecological footprint while maintaining high operational efficiency, Mr. Murali observes.

Challenges and Future
Sharing a grim picture, Mr. Mukherjee says that the demand-supply imbalance in almost all sectors is affecting not only sales revenue but profitability also. “Imports from Southeast Asia, specifically from Indonesia at zero duty, are posing a big threat to the Indian paper industry.” However, he maintains that the Indian paper industry is still evolving, and specifically packaging paper and board will grow at a CAGR of 7% -8%. JK Paper believes that there would be a healthy demand for various paperboard grades across different industries in future, and expects the market to grow at a rate of 8-10 percent CAGR over the next five years.

The industry is passing through quite a challenging phase right now, Mr. Agarwal shares. At present, India is exporting almost nil because our manufacturing capacities are low, cost of conversions are high as compared to the global standards, he elaborates. “That is creating a kind of a suffocating condition for the industries right now. The situation will remain challenging for the next 6-7 months, till the time consumptions are not opening and the global scenario is not stabilized a little bit. However, despite the challenging times and competitive environment, I see the pulp and paper industry, especially in India, as a fast-growing industry, which will certainly remain propitious in the coming years.”

For the fiscal year 2024-2025, Sripathi aims to achieve a saleable production target of 1.43 lakh metric tonnes. Correspondingly, it expects sales to reach 1.42 lakh metric tonnes. Our strategic procurement practices and robust production capabilities position us well to achieve these ambitious targets, ensuring sustainable growth and stability in a competitive market, Mr. Murali informs. By looking at the stability and economy of our country, growing literacy levels, growing youth population, E&Q Commerce and fast catching urbanization, Mr.Krishnan states that the situation is approaching some recovery, from the current rock bottom level, with respect to demand and realization as well.

Besides the prospects, the segment isn’t free of challenges which are quite prominent in nature. The biggest being the availability of fiber. According to the Naini Paper’s MD, the composition of fibre is 71- 72% recycled, 8-9% agro-based and the rest is wood-based. Where do you get this 71-72% raw material from when India’s recovery rate is only 50 percent? the IPMA President asked at an event. The industry is forced to import waste paper, causing a long-term impact on the cost efficiency of the mills. The remedy he suggested is to give a push to the virgin fiber-based industry. He maintained that the challenge was not restricted to wastepaper and virgin-based fiber. “For agro-based fiber, I can see competition coming from ethanol producers. Whatever is left out from the sugar ribs is going for ethanol production in terms of generating steam and fuel.”

Today a lot of companies are innovating to use paper in place of single use plastic. Giants like Unilever, Nestle and Britannia are all working to replace plastic with paper. This explains the opportunity; If all these companies turn to paper packaging, the country’s production won’t be able to meet the complete requirement.