Sardhana Paper Mill has expanded its total production capacity to 400 tonnes per day (TPD) after commissioning a new Paper Machine 2 (PM-2) with a 250 TPD kraft paper capacity, according to a report in The Pulp and Paper Times. The Sardhana Paper Mill capacity expansion represents a significant long-term investment in India’s packaging paper segment at a time of mixed market signals — with packaging paper demand growing steadily even as the broader industry faces headwinds from cheap imports and new capacity additions outpacing near-term demand recovery.
Sardhana Paper Mill’s existing Paper Machine 1 (PM-1) has a capacity of 150 TPD and has been in operation for approximately 30 years. The new PM-2 machine, with a 250 TPD capacity, brings total installed capacity to 400 TPD. Both machines are engaged in the production of kraft paper — the foundational packaging paper used in corrugated boxes, multiwall sacks, and industrial packaging applications that are central to India’s e-commerce, FMCG, food processing, and manufacturing logistics chains.
Why Is Sardhana Paper Mill Expanding Kraft Paper Capacity Now?
The decision to expand reflects a long-term bet on India’s packaging paper fundamentals rather than a response to current market conditions. India’s packaging paper market remains the backbone of the paper industry, accounting for 60–70% of total production, with demand growth expected at 5–7% in FY26. The country needs approximately 1 million tonnes of new capacity annually to meet a projected demand of 30 million tonnes by FY2027 — and kraft paper for corrugated packaging is the primary growth driver. While near-term capacity utilisation across the industry runs at 80–90%, the medium-term demand trajectory — driven by e-commerce penetration, food processing growth, and agricultural commodity packaging — provides the fundamental case for the expansion. Most of the new PM-2 equipment has been sourced domestically, though critical components including the headbox and dryer were imported, a common sourcing strategy for Indian paper mills balancing cost, lead time, and performance requirements.
What Does Sardhana’s Capacity Expansion Signal for India’s Kraft Paper Market?
The Sardhana expansion adds to a growing list of kraft paper capacity additions across India, even as the industry wrestles with the paradox of rising demand and margin pressure. India’s paper industry currently has 850+ mills with 526 operational, producing approximately 25 million tonnes annually from an installed capacity base of the same scale. The influx of cheap kraft paper imports from China has compressed margins for domestic mills, with several smaller players struggling to compete. Larger and mid-sized mills like Sardhana are responding by investing in newer, more efficient machines that reduce per-tonne cost structures and improve paper quality to defend market share. The kraft paper segment, in particular, benefits from the e-commerce boom: every parcel shipped through Flipkart, Amazon India, Meesho, and Zomato Hyperpure requires corrugated boxes made from kraft paper — a structural demand tailwind that makes new capacity economically rational over a 10–15 year investment horizon.
Market Reaction and Industry Response
The Pulp and Paper Times noted Sardhana Paper Mill’s expansion as reflective of “long-term vision amid short-term realities” — an apt description of the industry’s current sentiment. The Indian paper industry is at an inflection point: war-driven commodity volatility, elevated wood pulp costs, and a slowing pace of demand recovery have challenged near-term profitability, yet the medium-term demand outlook remains robust. Tamil Nadu Newsprint & Papers Limited (TNPL) returned to profitability in Q2 FY26 even as JK Paper and Seshasayee Paper reported margin pressure, highlighting the divergent performance within the sector. Capacity additions like Sardhana’s, if executed with cost discipline and quality consistency, are expected to be well-positioned when the demand recovery cycle accelerates in FY27-28.
What Happens Next?
Sardhana Paper Mill’s new PM-2 is already operational, according to the Pulp and Paper Times report, suggesting the ramp-up phase is underway. The mill is expected to target regional corrugated box manufacturers and multiwall sack producers in Uttar Pradesh and neighbouring states as its primary customer base. India’s requirement of approximately 1 million tonnes of new annual capacity positions mills like Sardhana as long-term structural contributors to domestic paper supply. Simultaneously, the government’s push for paper-based packaging as an alternative to single-use plastics — aligned with the EPR framework — is expected to further accelerate kraft paper demand from FMCG, pharmaceuticals, and food processing companies seeking compliant packaging alternatives.
Frequently Asked Questions
What is kraft paper and why is it important for India’s packaging industry?
Kraft paper is a strong, coarse paper produced from chemical wood pulp using the kraft process, known for its high tensile strength and tear resistance. In India, it is the primary raw material for corrugated boxes, multiwall bags, and industrial packaging — making it essential infrastructure for e-commerce logistics, food processing packaging, agricultural commodity transport, and manufacturing supply chains.
How does Sardhana Paper Mill’s expansion to 400 TPD compare to the industry?
At 400 TPD total capacity, Sardhana Paper Mill is a mid-sized player in India’s paper industry, which includes 526 operational mills with combined installed capacity of approximately 25 million tonnes. The PM-2 addition at 250 TPD represents a 167% capacity increase for Sardhana, placing it firmly in the organised mid-market segment that increasingly competes on paper quality and reliability of supply rather than pure price.
Is the Indian kraft paper market oversupplied in 2026?
India’s kraft paper market faces short-term capacity overhang as new machines come online across multiple mills simultaneously. However, the long-term demand trajectory — driven by e-commerce growth, food processing expansion, and EPR-driven shift from plastic to paper packaging — supports current expansion decisions. India needs approximately 1 million tonnes of new annual capacity to meet projected demand of 30 million tonnes by FY2027, suggesting medium-term supply absorption is feasible for well-positioned mills.
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