India’s paper and paperboard imports climbed 8% to 486,000 tonnes in the April-June quarter of FY2025-26, with a sharp 28% surge in shipments from China to 143,000 tonnes emerging as the single biggest pressure point for the country’s domestic paper industry. Imports from ASEAN countries also jumped significantly to 92,000 tonnes, compounding the competitive squeeze on Indian manufacturers just as the sector heads into a financially challenging second quarter marked by sharp profit declines at several major mills.
The surge in cheap Chinese paper is landing at a particularly inopportune moment for India’s paper majors, many of which have reported weak Q2 FY26 results characterised by industry-wide headwinds: rising raw material costs, adverse regulatory changes, and now intensifying import competition eroding pricing power in a market that had, until recently, been considered relatively insulated from global oversupply. Executives at several listed paper companies have flagged the China-linked import surge as a structural risk rather than a temporary blip, pointing to Chinese producers redirecting excess capacity toward price-sensitive export markets as domestic Chinese demand growth slows.
Adding to the complexity, India’s government has introduced Extended Producer Responsibility guidelines for paper packaging, effective April 1, 2026, mandating phased recycling targets for producers, importers and brand owners. While the policy is designed to promote higher fibre recovery, formalised waste management and circular economy adoption over the medium term, domestic manufacturers argue that compliance costs are landing on Indian producers at precisely the moment they can least absorb them, given the margin pressure from import competition. Industry associations have called for calibrated implementation timelines and, separately, for anti-dumping scrutiny of Chinese paper shipments.
Despite the near-term headwinds, the structural growth story for India’s paper and packaging sector remains intact. The domestic paper market, valued at approximately $10.66 billion in 2025, is projected to expand to $13.24 billion by 2034, underpinned by rising e-commerce volumes, expanding packaging demand, growth in the education sector and increasing urbanisation. This divergence between strong secular demand growth and near-term margin compression is creating a bifurcated market: companies with stronger balance sheets and diversified product portfolios are better positioned to weather the current import wave than smaller, commodity-grade producers.
Market reaction has been visible in paper stocks, several of which have underperformed broader industrial indices in recent weeks as investors price in compressed near-term earnings. Analysts covering the sector note that the rupee’s relative stability against the yuan has done little to blunt Chinese competitiveness, suggesting the import pressure stems primarily from genuine overcapacity in China’s paper sector rather than currency dynamics alone.
Looking ahead, the Indian paper industry’s response will likely combine lobbying for trade remedies with accelerated investment in recycled fibre capacity to meet the new EPR mandate cost-effectively. How quickly domestic mills can convert regulatory compliance into a competitive moat, rather than a pure cost burden, will determine whether India’s paper sector can defend margins through the remainder of FY26 even as import volumes from China and ASEAN show few signs of near-term reversal.
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