West Asia crisis poised to challenge India’s paper industry amid rising costs and export risks

INDIA – The ongoing crisis in West Asia is expected to create a dual challenge for India’s paper industry, with rising energy costs and potential disruptions to one of its key export markets.

In 2024-25, India exported paper and paperboard worth approximately US$980 million, of which nearly US$290 million, around 30%, was shipped to West Asian markets.

Key export categories include uncoated writing and printing paper, coated paper and paperboard, and kraft paper. Any prolonged disruption in the region could slow exports, affecting demand for Indian producers.

Energy-intensive by nature, the paper sector is highly sensitive to fluctuations in fuel and power costs.

The current crisis has already started impacting the supply of LNG, PNG, propane, and LPG, both directly to paper mills and indirectly via upstream suppliers and downstream industries.

These curtailments, coupled with rising global energy prices, are likely to put pressure on operational margins and production continuity.

Logistics challenges are also looming. Higher fuel costs, increased insurance premiums, and disruptions to established maritime corridors may drive up ocean freight rates, reducing export competitiveness.

Furthermore, trade diversion presents a potential risk: countries like China and Indonesia, whose paper exports to West Asia may also be affected, could redirect surplus inventories to India at predatory prices, intensifying domestic competition.

Pawan Agarwal, President of the Indian Paper Manufacturers Association, warned, “West Asia has traditionally been a strong and growing market for Indian paper exports.

“Any prolonged disruption could hurt demand, while diversion of surplus paper from export-driven economies like China and Indonesia at unfair prices adds further pressure. It is critical to monitor import trends and safeguard domestic manufacturers while ensuring stable supply chains.”

Supply chain challenges extend beyond energy. Paper mills are facing difficulties in sourcing essential chemicals, including hydrogen peroxide and binders, while downstream industries are likewise struggling to maintain production.

Although India’s imports of pulp from West Asia remain negligible, around 14% of India’s waste/recovered paper imports in value terms originate from the region, adding another layer of exposure.

The West Asia crisis comes amid a global trend of energy volatility affecting paper manufacturing.

For instance, Europe has seen rising paper production costs due to LNG shortages, prompting mills to invest in energy-efficient technologies.

Meanwhile, India’s ongoing efforts to expand recycled paper usage are being tested as feedstock supplies from key regions, including West Asia, face interruptions.

Analysts note that India’s paper sector will need to balance energy risk mitigation, import monitoring, and strategic export diversification to maintain competitiveness during the unfolding geopolitical uncertainty.

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