Low-cost imports and high input costs to weigh on paper industry margins: CareEdge Ratings

India's writing and printing paper industry is likely to continue facing pressure on margins as low-cost imports and elevated raw material costs weigh on profitability, according to Priti Agarwal, Senior Director at CareEdge Ratings.

Agarwal said realisations in the segment have declined by 6-7% and are unlikely to see a meaningful recovery in the near term. She added that industry players, particularly non-integrated manufacturers, are expected to face continued pressure despite resilient demand.

"What we see that writing and printing paper segment is more affected, and the realisations have been under sustained margin pressure because of low-cost imports, GST distortions, which happened in September 2025 and elevated input cost," Agarwal said.

According to CareEdge Ratings, the segment also faced additional challenges from freight volatility and supply chain disruptions linked to the West Asia crisis. However, demand from the education sector is helping support volumes.

Agarwal said industry volumes could grow by around 3-4%, but profitability is likely to remain largely unchanged.

The ratings agency highlighted rising costs across key raw materials used in paper manufacturing. Hardwood pulp prices have remained above $600 per metric tonne, while domestic wood prices have increased because of limited fibre availability and competition from other wood-based industries such as MDF manufacturing.

Waste paper prices have risen from around ₹13,000 per metric tonne in the financial year 2020-21 (FY21) to about ₹18,800 per metric tonne in the financial year 2025-26 (FY26). Bamboo prices have also recovered to nearly ₹82,700 per metric tonne in 2025-26 after declining for several years.

Agarwal said the pressure on realisations is being driven largely by imports from China and other Asian countries.

She explained that domestic producers have limited ability to pass on higher costs to customers because raising prices could affect demand and market share.

Agarwal said the writing and printing paper segment is unlikely to face major disruptions because of water shortages and El Niño conditions. She noted that manufacturers are expected to prioritise supplies to the education-linked segment, even if production adjustments are required elsewhere.

CareEdge Ratings believes the sector's resilience will depend on operational efficiencies and policy support as companies navigate a challenging pricing environment.

For full interview, watch the accompanying video