Although Indias per capita consumption of paper is quite low compared to global countries, the demand is set to rise from the current 13 million tonnes (mt) to an estimated 20 mt by 2020. An India Ratings report estimates Indias per capita paper consumption at nine kg, against 22 kg in Indonesia, 25 kg in Malaysia and 42 kg in China. The global average stands at 58 kg. Indias paper demand is set to rise 53% by 2020.
In the last five years, the Indian paper sector has invested about Rs 20,000 crore on capacity enhancement, technology upgrade and acquisitions. The raw material prices for the paper industry soared in FY15-16. This together with slug of cheap imports from China and other Southeast Asian nations negatively impacted the profit margins of most paper producers.
The Indian Paper industry finally saw some demand recovery in FY14 but moderated again in FY15. During 2011-15, consumption grew by 6.3%, higher than the global average.
The index of industrial production (IIP) recorded a decline of 0.1% in FY14. Paper and paper products industry saw growth of only 0.1% y/y. However, the industry saw a revival in FY15 with a growth of 3% y/y. In 8MFY16, it recorded a growth of 3.2% y/y.