Sumeet Ba­ga­dia,

As­so­ciate di­rec­tor, Choice Broking

Dalal Street Investment Journal - - SPECIAL REPORT -

In­dia is cur­rently ranked 15th among pa­per pro­duc­ing coun­tries in the world, with an es­ti­mated de­mand of 14.70 mil­lion tonnes, which is ex­pected to rise to 25 mil­lion tonnes by 2024-25. More­over, with In­dia main­tain­ing its sta­tus as one of the fastest grow­ing economies as well as one of the fastest grow­ing pa­per mar­ket, it is es­ti­mated that pa­per con­sump­tion could in­crease in ex­cess of 50% to 20 mil­lion tonnes by 2020. We feel this growth will be driven by: Eco­nomic de­vel­op­ment in In­dia, which will re­sult in in­crease in de­mand by key man­u­fac­tur­ing sec­tors as their re­quire­ment for pa­per will in­crease, Boom­ing e-com­merce mar­ket, which will in­crease de­mand for pack­ag­ing ma­te­ri­als such as card­board, la­bels, car­tons etc., Gov­ern­ment's push to in­crease lit­er­acy in In­dia, via var­i­ous ini­tia­tives. While we have a pos­i­tive out­look to­wards the in­dus­try, one must keep a keen eye on the im­port front of the pa­per in­dus­try as over the past 5 years im­ports have grown at a CAGR of 8% in vol­ume terms. Fur­ther­more, im­port du­ties on pa­per and pa­per­board in ASEAN coun­tries cur­rently stands at Nil, thus re­sult­ing in im­port growth of 40% per an­num. In ad­di­tion to im­ports, the in­dus­try also faces threat from in­creased fo­cus on digi­ti­sa­tion and pa­per­less trans­ac­tions. How­ever, given the gov­ern­ment's in­creased im­pe­tus on ed­u­ca­tion, along with in­creased de­mand from the pack­ag­ing ma­te­rial in­dus­try, we ex­pect the In­dian pa­per in­dus­try to wit­ness sig­nif­i­cant growth and re­main one of the fastest grow­ing pa­per in­dus­tries in the world.

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