Application of paper in diverse sectors is boosting the growth of the market and consequently with increasing demand,
paper and pulp companies can be seen innovating at a breakneck speed to grab a larger share of the expanding market. There are more than 600 paper mills in India today churning out paper to fulfil the ever increasing demand. Notwithstanding the move towards digitalization, the diversified application of paper is the factor sustaining its demand and is expected to continue to do so in the near future. There is an increasing demand for paper products such as tissue paper, tea bags, filter paper, and coated paper etc. These applications are replenishing the demand portion that has depleted with digitalization and the move towards paperless processes.
According to a report by Research and Markets, the Indian paper market is expected to become worth $13.4 billion by 2024, growing at a CAGR of 7.8 per cent.
“The industry is about to experience a major transformation and enter a period of consolidation. This transitional period will lead to a fraction of the biggest companies controlling the majority of the industry and the more marginal paper mills being pushed out of the market,” said Praveen Singhavi, President of April Group, Indonesia and Dr. B.P. Thapliyal, Director of Central Pulp and Paper Research Institute to Kanvic.
New level of technology maturity
In order to meet the increasing demand, players in the paper industry are looking to multiply their capacity manyfold. However, there are several impedance factors at play, restricting the growth of the market. First and foremost is the exorbitant cost of production, demanding a huge cost for raw materials. The high cost of power further adds to the woes. Then there is the fact that majority of the mills are concentrated in particular areas, thus limiting their reach to different customers. Last but not least is the usage of legacy technology which prevents growth and the challenges posed by environmental concerns for which a new level of technology maturity is required.
Even though the industry has taken steps to enhance its capacity, it has a long gestation period. As a result, the economic viability of an investment becomes questionable owing to the impact made by several factors such as raw materials and imports. Given the fact that it is still fragmented, its rapid growth is encumbered and the solution to this problem is the aforementioned consolidation. Being majorly monopolised by small and medium sized units, fewer than six mills today account for close to 90 per cent of the production of newsprint. With the varied demand calling for modernization of the Indian mills, improvement of productivity and building of new capacities is going to be an imperative for the paper industry in India.
