The demand for recovered fibre in India is primarily driven by the need for environmentally sustainable manufacturing processes, cost-effectiveness, and the limited availability of virgin pulp. 

Vivek Chawla, Wholetime Director & CEO, Emami Paper Mills Ltd, adds, “Currently, 70-75% of paper and paperboard consumed in India are recycle grade, requiring about 20 million tonnes of waste paper annually.” Given India’s low per capita paper consumption of 15 kg compared to the global average of 58 kg, any increase in consumption significantly impacts overall demand. The shift from wood-based to recycled paper – evidenced by the reduction of wood usage from 80% in the 1980s to 20% today – indicates a continued rise in demand for recovered fibre.

Until about 10 years ago, Indian paper production relied on three pulp types: wood (40%), agro-based fibre (30%), and recycled fibre (30%). In recent times, this has shifted significantly.  

“Today, 70-75% of paper produced in India uses recycled fibre,” says Pavan Khaitan, Vice Chairman & Managing Director, Kuantum Papers. “This shift is due to the high reliance of industrial-grade papers, like packaging and kraft paper. New production lines are based on these materials, driven by the scarcity of wood and agro-based fibres. Consequently, the industry increasingly turns to recycled fibre as a sustainable and viable resource.” 

Hrishikesh Vora, CEO, Adler Paper LLP, notes a substantial increase in paper mill capacity over the past year but adds, “due to the ongoing global economic challenges, the demand for recovered fibre in India is at an all-time low.” He observes, “Many paper mills are using different blends to produce paper, depending on availability and supply-demand of certain grades,” and points out that “each country is operating differently; it is not like it used to be in the past.” Vora is confident that long fibre from America and short fibre from Europe will remain crucial, saying, “The industry will continue to evolve as paper mills experiment with different grades to create various blends, or ‘cocktails’, for paper production.”

Supply-demand dynamics

Domestically, the supply of recovered fibre primarily comes from waste paper collection. Khaitan points out that although this collection has been gradually increasing over the years, India still has a long way to go to reach the levels achieved by advanced economies. 

India’s paper recovery rate is under 30%, well below the global average of 58%, meaning only 55-60% of domestic demand is met locally, with the rest covered by imports. Khaitan attributes this to India’s manual collection systems, which, despite employing many, result in lower recycling volumes. 

“In 2024, supply is significantly exceeding demand, a scenario we have not seen before,” says Vora. “Despite increased capacity, we are facing inconsistencies: when there is supply, there is no demand, and when there is demand, there is no supply. It is a challenging situation.” He adds, “We handle a wide range of papers, including writing, printing, duplex, kraft, and tissue. Domestically, we are seeing more white grades alongside traditional brown grades, while internationally, we manage around 70-75 different waste paper qualities. This year’s situation is complicated by the fluctuating availability of different grades and the manual collection processes still prevalent in India.”

Sustainability efforts

There has been an increasing number of paper mills in India embracing sustainability initiatives.

“Indian companies are using advanced technologies to enhance fibre recovery and energy efficiency in recycled paper production. They are also promoting recycling habits and waste segregation at the source, says Chawla.”

Indian companies are focusing on importing higher-quality waste paper, a shift Khaitan views as crucial for sustainability. He says that essentially we are sending a message to the world: “Don’t send us your garbage; send us good quality waste paper.” He adds, “Our operations are improving yields and efficiency, leading to better quality and a lower environmental impact.”

India has relied on mills using recovered fibre rather than pure wood pulp. In terms of sustainability, Vora notes, “Paper mills are now more open to recycling various grades and types of waste paper, including challenging materials like foil and poly-coated papers. More mills are successfully processing these difficult grades into new products.”

Regulatory hurdles

The main regulatory challenge is the 2.5% Basic Customs Duty (BCD) on imported waste paper, which supplies over 40% of demand. “Solving this will need legislative measures like Extended Producer Responsibility (EPR) and stronger recycling laws,” says Chawla.

While Khaitan does not see many regulatory challenges, he notes, “The main issues are in the economic model, particularly manual waste paper collection. We need to mechanise and better manage the entire process.” He emphasises the need for self-reliance in recycled fibre, stating, “With over 70% of India’s paper production depending on recycled fibre, improving collection efficiency is crucial for reducing costs and enhancing sustainability.”

Vora sees no major regulatory changes affecting the recovered fibre industry but highlights severe shipping and logistics challenges. “Shipping issues are disrupting the industry, with varying rules across countries complicating logistics and freight management. This variation in rules, combined with disruptions in global shipping, directly impacts supply and demand.” Although regulatory challenges are minimal, the complexity of logistics and freight remains the main hurdle to the industry’s growth and efficiency.

Global market influence

Global market trends are impacting India’s recovered fibre industry as countries push for self-sufficiency and expand their paper mill capacities. This shift challenges Indian mills that previously relied on exports from these nations, as local production now meets their needs. 

Vora notes that economic factors like recessions, unemployment, and inflation are disrupting the steady flow of recovered fibre to India. “Fluctuations in the regular grades and types of recovered fibre, compounded by inflation, rising interest rates, and freight issues, add to the instability. The global textile industry’s challenges, especially in Bangladesh, the Far East, and the Middle East, further complicate imports and exports, with difficulties in container availability and pricing.”

Global market trends, including China’s restrictions on wastepaper imports, have boosted India’s wastepaper availability. “Imports have risen from 4.01 million tpa in 2017-18 to around 6.5 million tpa since 2018-19, making imported wastepaper more cost-competitive than domestic supply,” says Chawla.

Advanced economies generate excess waste paper, which countries such as India and China import. “India acts as a buffer, managing and consuming large volumes, balancing the global market, and ensuring stable demand for recycled fibre,” says Khaitan.

Market vision

Does the future of recovered fibre in India look promising? A common answer echoes from our experts: “Yes.” 

Despite the significant challenges faced this year, transitioning from being one of the most optimistic industries two years ago to one of the most challenging now, Vora believes that India will emerge as a key growth engine. With one of the youngest populations globally, strong consumer demand, and robust spending power, India is well-positioned for future growth. However, to address the current oversupply, he says, “There may need to be consolidation among paper mills or even closures to help the market recalibrate and rejuvenate. The competition is intense, and managing the sector is complex due to the large number of mills – around 800 across India.”

Further, Vora strongly urges companies to adopt strategies to navigate these challenges effectively. He says that consistent purchasing, whether domestic or international, is crucial. “By averaging out costs through regular procurement, companies can better manage their expenses and improve their chances of survival. Additionally, innovation will play a key role. Paper mills are increasingly experimenting with different grades and blends to produce high-quality paper. This approach will likely continue as mills seek to create new and improved products.”

Chawla sees a rising demand for sustainable products. “To capitalise on growth opportunities, industry stakeholders should focus on improving domestic recovery rates, advocating for supportive regulations, and adopting innovative technologies to enhance efficiency and sustainability.”

Khaitan sees the main challenge as making waste paper collection and regeneration more efficient. Streamlining and automating the entire process – from handling to consumer return – can better control costs. He emphasises, “Recovered fibre is essential for sustainability. Reusing more is crucial for our planet.” The focus should be on enhancing the efficiency of regenerating and reusing recycled fibre for paper production. Advances in technology are aiding this process, offering better results and improved control over costs, quality, and processes.

While challenges may persist, the next 20 years promise substantial growth and success for the recovered fibre industry. The time to act is now – let’s seize the opportunities ahead.