Indian paper industry in crisis: Only 550 of 900 mills operational
The Indian paper industry is facing a downturn, with closures and operational disruptions reported across the country. Recent data indicates that around 550 of the nation's 850-900 paper mills are operational, according to the Indian Paper Manufacturers Association (IPMA). This decline is attributed to a combination of factors, including raw material scarcity, increased import competition, and economic pressures.
16 Jun 2025 | 3192 Views | By Rahul Kumar
The Gujarat Paper Mills Association (GPMA) revealed that over 20 mills shut down in the six months leading up to mid-2023. This impacted industrial areas like Morbi, Ahmedabad, Surat, and Vapi. Meanwhile, North India witnessed significant disruptions, with kraft paper mills temporarily halting production due to reduced demand. As per a senior paper industry expert, "The industry's reliance on imported wood chips and waste paper, coupled with a low domestic waste paper recovery rate, has further strained operations. Duty-free imports under free trade agreements have intensified competition, making it difficult for domestic mills, especially smaller ones, to remain viable."
Other challenges extend to waste paper suppliers experiencing price drops and inefficiencies in the collection system. Sustainability efforts, while necessary, have added operational costs, further squeezing profit margins. Meanwhile, paper mills in the Northeast are operating at reduced capacity due to raw material shortages, while in Gujarat, reduced exports and local demand have led to operational difficulties, reflecting a broader crisis in the Indian paper industry.
As per data released by the Directorate General of Commercial Intelligence and Statistics, paper imports reached 19.3-lakh tonnes in FY 2023-24, a rise of 34% over 14.3-lakh tonnes imported in the previous year. The surge of 34% comes on top of a 25% jump in paper imports in the previous year, FY 2022-23. The Association of Southeast Asian Nations (ASEAN) has come to account for the largest chunk in the import pie in the country, accounting for a 27% share.
As per IPMA, the paper imports from ASEAN, which enter the country at zero import duty under the ASEAN-India free trade agreement, doubled to 5.1-lakh tonnes during the year from 2.7-lakh tonnes in FY 2022-23. In value terms, paper imports have doubled in the last three years. From INR 6,140-crore in FY 2020-21, the figure has notched up to INR 13,248-crore in FY 2023-24, the highest ever level, with a three-year compound annual growth rate of 29%.