The unfolding of the paper-pulp pact in the India-EU Free Trade Agreement

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 noted 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 relentless 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.

The strategic risk is most acute in the high-value segments. The analysis suggests a limited export opportunity for India in sophisticated, high-end coated graphic and specialty papers, a domain where the European manufacturers hold a technological advantage and global presence. Consequently, India’s converters and brand owners may increasingly look to EU suppliers for their advanced coated and specialty paper needs, placing direct competitive pressure on local capacity. Unless Indian firms can rapidly upgrade to meet this standard, they risk ceding the premium end of their own market.

The lifeline, however, is woven into the agreement’s fine print. Tariff relief on key inputs — pulp, bleaching chemicals, and, most critically, capital equipment and engineering services — is a material positive. This lowering of production and modernisation costs offers a hidden dividend, a chance for Indian mills to accelerate technology upgrades, improve yields, and reduce emissions. For energy-intensive mills operating older machinery, this is not a luxury but a crucial efficiency decision, allowing them to better manage the persistent cost pressures that squeeze margins.

Adding a layer of complexity is the implicit regulatory alignment. The decarbonisation provisions within the FTA and the looming shadow of the EU's Carbon Border Adjustment Mechanism (CBAM) mean that competitiveness will increasingly be judged by environmental footprint. As sustainability transitions from a market differentiator to a baseline industry expectation, Indian mills with high-emission profiles may find themselves disadvantaged, effectively increasing the cost of goods sold to the EU.

When Team PrintWeek spoke to the paper industry insiders during Pamex, they said, "The short-term impact over the next year is expected to be modest, given that many tariff cuts will be phased and require legal ratification." 

However, the long-term prognosis depends entirely on strategic policy and industry action. Targeted support, particularly technology upgrade incentives and conscious carbon-adjustment planning, will determine the outcome. The FTA provides an opportunity for cost-effective capital expenditure; the domestic industry's ability to seize it and transform itself into a high-efficiency producer will determine whether the agreement is viewed, years from now, as a catalyst for growth or a moment of strategic vulnerability. The future of the Indian paper mill is now a race for technological efficiency.