Paper production to increase 6%

However, exports unlikely to rise owing to increased domestic demand

With increase in capacity, domestic paper production is estimated to see a 6 per cent rise in the current financial year to 63.6 lakh tonne, compared with 60 lakh tonne last year, said R Narayan Moorthy, secretary general, Indian Paper Manufacturers Association (IPMA).

Following an increase in domestic demand and rising international competition, exports are unlikely to see a rise from last year's 1.75 lakh tonne, Moorthy said. "Companies prefer to focus on the domestic market as the international market share can be very dicey. Thus, local demand is always preferred to that of export."

Paper prices have risen in 4-5 tranches this year and experts feel the trend will continue in the next financial year as well. In the last 12 months, the industry has seen an average price rise of about Rs 2,000-2,500 per tonne.

"Be it writing and printing paper or newsprint and packaging paper, prices are on the way up," said Vineet Nigam, deputy director with ICRA Ltd.

Comparatively, industry experts feel that while coated paper prices are stable at current levels with little scope for movement, prices of uncoated paper may see a rise for another 2-3 years.

While shortage of pulp is keeping supply restricted, demand for paper is also on the rise.

Annually, the total paper demand is growing at about 7 per cent and capacity increase is about 4-5 per cent, said B Hariharan, group finance director with Ballarpur Industries.

Domestic demand has a huge potential with per capita consumption being one of the lowest in the world at 4.5 kg compared with China's 28.3 kg. The Asia average stands at 26.9 kg and the global average at 52.6 kg.

Writing and printing paper contributes about 49 per cent of the total paper consumption, industrial paper about 36 per cent and newsprint the remaining 15 per cent, according to ICRA data. IPMA members form about 38 per cent of the total paper sector, excluding newsprint.