India-EU FTA opens debate for paper sector

The India-European Union Free Trade Agreement has triggered fresh debate within the Indian paper and paperboard sector, with early reactions ranging from cautious optimism to clear scepticism about who stands to gain. While the agreement is expected to liberalise a large share of tariff lines across goods, its practical implications for paper and pulp are more complex than headline trade gains suggest.

The net effect on India’s paper industry will be a delicate, mixed blessing. On one hand, Indian manufacturers stand to gain improved access for their lower-value, labour-intensive paper grades and commodity packaging into the wealthy European market, a strategic opportunity to scale existing strengths. On the other hand, the domestic market will face heightened, immediate competition from the European Union, a rival distinguished by its highly automated, capital-intensive, and technologically advanced mills.

This challenge arrives at a precarious time. As Ayush Mittal of Shitla Papers recently notes on LinkedIn, the Indian paper mill industry is already navigating a phase of “recalibration,” struggling with the chronic volatility of imported pulp and waste paper prices, coupled with cost pressures from energy and logistics. For many, the FTA is not merely a new market dynamic. It is an accelerant to a pre-existing modernisation imperative.

Several industry participants who spoke to PrintWeek at Pamex indicate that the short-term effect is likely to be limited. Many tariff reductions are expected to be phased and subject to ratification, which means immediate market disruption is unlikely. In their view, the FTA is less a sudden shock and more a signal that efficiency and sustainability will matter even more.

The sustainability dimension is particularly relevant. With European policy increasingly linking trade and environmental performance, Indian mills with older assets and higher emission profiles may face added pressure if they target EU markets. Carbon accountability is shifting from a branding issue to a cost variable.

However, not everyone is convinced that the agreement tilts in India’s favour.

PR Ray, a paper industry expert, offers a more guarded reading. He argues that on raw materials, the FTA brings little incremental benefit. “In pulp, Europe can offer northern softwood and southern softwood. The supply positions for both are extremely tight and pricing beyond Indian mill budgets,” he says. He adds that waste paper from Europe is already widely used and operates near quality and supply limits, with low duties even before the FTA.

On exports, Ray is blunt. “India primarily produces commodity grades, for which Europe will not have any major usage,” he says. He points to the European Union Deforestation Regulation as a key barrier, noting that many Indian mills are not yet aligned with its requirements. In his assessment, large-scale finished paper exports from India to Europe remain unlikely in the near term.

Imports, in his view, are where the real shift could occur. Basic grades from Europe are not very attractive due to high prices, but speciality grades, especially for packaging and food applications, could find buyers in India. As Indian printers invest in higher-end presses and finishing systems, demand for consistent, high-performance substrates is rising.

“These machines would need suitable paper and paperboards to deliver optimum products, which Indian paper mills may not be equipped to deliver,” Ray explains. In such cases, he believes EU suppliers would be well-positioned to step in.

He also flags the capital intensity of papermaking. Large investments take time to plan and execute, and he questions whether the Indian industry’s typically cautious investment cycles will allow it to respond quickly. Printing and packaging, with lower ticket sizes and faster upgrade cycles, may see quicker gains from the agreement than paper manufacturing itself.

In his summary, Ray describes the deal as closer to a win for the EU paper industry than for Indian mills, even while acknowledging the broader trade logic behind the pact.

The truth may lie between these positions. The FTA does not automatically redraw competitive lines, but it does expose them more clearly. For Indian paper producers, the agreement sharpens existing questions around scale, technology, fibre security and sustainability compliance.