According to a report this week by Business Standard, New Delhi, India, the Indian paper industry could witness a round of consolidation and cooperation among various players in the next few years to collectively leverage fast changing manufacturing technologies and smoothen backward integration for raw materials. The industry, which is highly dependent on wood pulp for manufacturing of paper and paper-based products, is also trying to widen its raw material base to lower cost of production. This, in the end, could leave less than ten large players in the country's domestic market in place of the current 28 major companies.

India, which is the second most populated country in the world after China, consumes less than 10 kilograms of paper against a global average of 58 kilograms and U.S. consumption of over 350 kilograms. This means that there is a "huge potential" for the sector, according to Business Standard, which can be met through use of modern technologies.

India’s paper consumption is expected to grow to around 40 million metric tpy by 2026 from the current 14 million metric tpy. Industry sources cited in the report estimate that new investments of Rs 90,000 crore will be required in the next few years. The exponential growth of e-commerce in the country has opened up a new horizon and could contribute significantly to demand where paper is being extensively used for packaging.

"Just like in all other sectors both globally and domestically, the Indian paper industry has to move towards adopting advanced technologies and here size would come into play. Those who can adopt new technologies in paper making would survive, while others would feel the heat," said Rajinder Gupta, chairman and manager of Trident Group, one of the fastest growing paper companies in the nation.

He also said that small papermaking units that have a cumulative production capacity of less than Rs 1,000 metric tons of paper per day could find it increasingly difficult to survive the cut-throat competition in the sector.

"Our overheads are growing, while the number of compliances are also not getting lessened. All of these make me feel that those who can quickly adopt modern manufacturing technologies will be better off in the coming days," Gupta added.

Subhash Garg, chairman of Ruchira Papers, said that technological adoption has to be swifter as the cost of non-wood based raw material for making paper is gradually coming at a par with wood-based raw materials.

"One has to update his technologies as quality of paper has improved so much in the last few years that paper made from non-wood raw materials is as good as those made from wood, while the cost of the latter is lower," Garg explained.

Apart from non-wood sources, India's paper industry is actively promoting agro-forestry to meet its raw material needs, but a long gestation period acts as a hindrance.

"Non-wood based raw materials are increasingly becoming more popular in the paper industry in India. Having mapped paper mill water use, companies are working to develop site specific plans at priority facilities that address additional efficiencies around water reuse and potential reduction," said Udo Schuertzmann, managing director of International Trade and Exhibitions India. The group recently organized one of the major exhibitions on paper in the nation's capital.

A snapshot of India's paper industry and market factors shows that :

• India accounts for 2.6% of world paper production.
• India accounts for 1.6% of world paper consumption.
• The total size of the industry is estimated to be around Rs 50,000 crore.
• Per capita consumption of paper in India is 9.8 kilograms, while the global average is 58 kilograms.
• India’s paper consumption is expected to grow to around 40 million metric tpy by 2026 from the current 14 million metric tpy.
• There are almost 28 established players in the Indian paper sector.
• The growth in e-commerce has opened a new opportunity for the sector.