India’s $980 Million Paper Export Industry Faces Cost Shock as West Asia Conflict Disrupts Trade

India’s paper sector is facing one of its toughest operating environments in recent years as geopolitical tensions in West Asia trigger simultaneous cost and export pressures.

Industry stakeholders say the crisis has created a double squeeze; production costs are rising sharply due to energy shortages, while export markets worth hundreds of millions of dollars are facing disruption. According to the Indian Paper Manufacturers Association, the sector’s profitability could take a significant hit during the current financial year if supply disruptions persist.

Energy Costs Rising for a Highly Fuel-Intensive Industry

Paper manufacturing is among the most energy-intensive industrial processes, with energy accounting for 20–25% of total production costs.

However, recent disruptions have affected the supply of key industrial fuels, including:

• Liquefied Natural Gas (LNG)
• Piped Natural Gas (PNG)
• Propane used in industrial boilers

Fuel suppliers have begun curtailing deliveries to industrial consumers to prioritise households and essential services, forcing paper mills to operate under tighter supply conditions.

In addition, mills are facing shortages of critical chemicals such as:

• Hydrogen peroxide used for bleaching
• Industrial binders used in paper finishing

Many of these inputs are sourced through Gulf supply chains. Freight costs and raw material prices have also risen sharply, prompting companies such as Three M Paper Boards to approve price hikes earlier this week to protect margins.

$290 Million Export Market Under Threat

West Asia remains one of the most important export destinations for Indian paper products.

According to industry data:

• India exported $980 million worth of paper in FY 2024–25
• Nearly 30% of exports, about $290 million, went to West Asian markets

However, disruptions linked to tensions around the Strait of Hormuz have significantly increased shipping risks.

As a result:

• Export shipments are facing delays and logistical bottlenecks
• War-risk insurance premiums for cargo have risen sharply
• Several buyers in Gulf markets have put orders on hold

Major export categories affected include:

• Uncoated writing paper
• Printing paper
• Kraft paper used in packaging

Manufacturers in northern production hubs such as Panipat report that some shipments are currently stranded or awaiting confirmation from overseas buyers.

Dumping Risk Could Intensify Competition

Industry leaders are also warning of a potential surge in cheaper imports into India.

As exports to West Asia slow, large paper-producing countries such as China and Indonesia may redirect surplus supplies to other markets. “There is a real risk of surplus paper from economies like China and Indonesia being diverted to India at unfair prices,” said Pawan Agarwal, IPMA President.

Increased dumping could further squeeze domestic manufacturers. India currently has around 550 operational paper mills, many of which operate on thin margins and depend heavily on export demand.

Listed companies in the paper sector are already facing varying degrees of financial pressure:

• JK Paper has reported seven consecutive quarters of losses, reflecting rising input costs.
• Three M Paper Boards has initiated price hikes to protect margins.
• Andhra Paper has reported declines in revenue and earnings per share in recent quarters.
• Seshasayee Paper and Boards continues to maintain strong revenues but faces mounting cost pressures.

-With inputs from agencies

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