Insights into the future of Indian paper industry from Paperex 2019

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The latest trends and innovations in the paper industry were showcased at Paperex 2019. Here's what our team observed at the event.

The world's largest paper show, Paperex 2019 was held at New Delhi last week and various leaders and professionals from the paper industry were gathered there. Our team Shiv Kumar Sharma and Ashwani Kumar interacted with paper industry leaders at the event like Mr. Praveen Singhavi, President of April Group, Indonesia; and Dr. B.P. Thapliyal, Director of Central Pulp and Paper Research Institute. These were some of the major trends they observed from their conversations - 

1.   Industry consolidation is imminent

In line with Kanvic's latest research about the Indian paper industry, it is currently enjoying a period of steady growth and rising profits. However, 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. The major reasons cited at the event for the upcoming consolidation were smaller paper mills not being able to compete with the larger players’ superior financial power and investment capability, lower cost paper imports from south-east Asia and stringent environmental regulations by the Government of India. 


2.  China – turning from an exporter to an importer

One of the major talking points at Paperex was that China has shifted its stance from being a net exporter of paper to net importer over the years. This is evident by the huge increase in the import volume of paper and paperboard in China. Compared to 2014, China’s volume of paper import increased by 122% to 6.27 million tons in 2018 and its import value also saw an increase of 54% (USD 5.53 billion) in 2018. Lower price and superior quality of imported paper and paperboard as compared to its domestic counterparts are the main reasons for this change in trend. 


3.  Future is recycled

As the industry moves more towards sustainable and environmentally friendly practices, recycled fibre is growing as a major source of raw material for the paper industry with an increase from 65% to 73% usage in India in recent years. As observed during panel discussions at Paperex, recycled fibre will become the biggest source of raw material for the foreseeable future and easy availability and cheaper price from the international market are accelerating the trend to grow further. 


4.  Sustainable development - opportunities as well as threats 

Shifting towards sustainable development practices presents both opportunities and threats for the Indian paper industry. As we pointed out in our earlier article, smaller Indian paper mills will struggle financially to invest in the infrastructure required for adapting to the stringent environmental regulations on water and fuel consumption imposed by the Government of India. The ban on plastic, on the other hand, presents tremendous opportunities for the paper industry to grow and diversify their products’ uses. The demand for paper products is expected to skyrocket in the coming years as the world is getting more environmentally conscious and the demand for an alternative to plastic in people’s daily lives grows. 


5.  Customer focus will win the day

While demand for paper products has grown tremendously, the packaging industry has not been able to fully capitalise on it. Paper has not been able to replace plastic completely because paper has not been able to offer the durability and availability of plastic till date. During a panel discussion on this trend, it was pointed out that the packaging industry needs to focus on customer needs and develop paper technology that can increase the durability of paper and replace plastic as the main packaging material in the customers’ everyday lives.


6.  Economic slowdown - a marginal impact on the paper industry

The industrial sector has been heavily affected by the current slowdown of the Indian economy, as reported in our recent article. But the impact of the economic slowdown on the paper industry will be mitigated by several factors like increased use and awareness of sanitary and hygienic products, favourable younger demographic, better quality packaging requirement for FMCG products and the rise of e-commerce. The increasing demand for consumer durables and rising preference for packaged food and online delivery were also cited as factors which will soften the blow of the economic slowdown on the paper industry.

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