With the increasing per capita consumption of paper, the domestic industry is likely to touch 11.5 million tonnes (MT) capacity in 2011-12, a study said.
"Indian paper industry is poised to grow and touch 11.5 MT in 2011-12 from 9.18 MT in 2009-10," the study by industry body Assocham said.
The per capita paper consumption in India increased to 9.18 kg in 2009-10 from 8.3 kg in the previous year, it said.
However, consumption is still low compared to 42 kg in China and 350 kg in developed countries, it added.
Assocham said the industry could become more competitive with improvements in infrastructure like roads, railways and communication facilities.
It also demanded that degraded forest land should be made available to it for raising plantations.