Introduction 

The paper and allied products industry comprises establishments that manufacture pulp, paper, paperboard, and other converted paper products. The industry also includes establishments that produce paper and paperboard containers, corrugated boxes, paper bags, stationery, sanitary paper products, and other paper products. The industry is one of the largest and most diversified sectors in the manufacturing sector, employing millions of workers and contributing to the economic development of many countries. The industry is also facing various challenges and opportunities in terms of raw material availability, environmental impact, technological advancement, market demand, and competition. In this report, we will provide an overview of the manufacturing industry, the market potential, the growing demand, the market size and growth projections, the subsidies and incentives, the marketing and sales, and the production scale and investment for the paper and allied products industry. 

Overview of the Manufacturing Industry 

The paper and allied products industry is a capital-intensive and energy-intensive industry that relies on raw materials such as wood, recycled paper, agricultural residues, and non-wood fibers. The industry uses various processes to convert these raw materials into pulp, paper, and paperboard, such as mechanical, chemical, and semi-chemical pulping, bleaching, coating, calendaring, and finishing. The industry also uses various technologies to produce different types of paper and paperboard products, such as printing and writing papers, packaging and industrial papers, tissue and hygiene papers, and specialty papers. The industry is also involved in the recycling and recovery of paper and paperboard products, which helps to reduce the environmental impact and conserve the natural resources. The industry is governed by various standards and norms, such as the Bureau of Indian Standards (BIS), the International Organization for Standardization (ISO), and the Forest Stewardship Council (FSC), which ensure the quality, safety, and sustainability of the products. 

Market Potential 

Global Market Potential 

The global paper and allied products market is expected to grow at a compound annual growth rate (CAGR) of 3.5% from 2020 to 2027, reaching a value of $1.6 trillion by 2027, according to a report by Grand View Research. The growth of the market is driven by the increasing demand for paper and paperboard products in various end-use industries, such as packaging, printing, education, hygiene, and healthcare. The market is also influenced by the changing consumer preferences, environmental concerns, technological innovations, and government regulations. The Asia-Pacific region is expected to dominate the market, followed by North America and Europe, due to the rapid industrialization, urbanization, and population growth in the region. The major players in the global market include International Paper, Kimberly-Clark, Procter & Gamble, Stora Enso, and UPM-Kymmene. 

Market Potential in India 

The paper and allied products market in India is expected to grow at a CAGR of 6.7% from 2019 to 2025, reaching a value of $13.4 billion by 2025, according to a report by Mordor Intelligence. The growth of the market is driven by the increasing demand for paper and paperboard products in various end-use industries, such as packaging, printing, education, hygiene, and healthcare. The market is also influenced by the rising literacy rate, urbanization, e-commerce, and government initiatives. The packaging and industrial paper segment is expected to account for the largest share of the market, followed by the printing and writing paper segment, due to the growth of the e-commerce, food and beverage, pharmaceutical, and consumer goods industries. The major players in the Indian market include ITC, JK Paper, Seshasayee Paper and Boards, Tamil Nadu Newsprint and Papers, and West Coast Paper Mills. 

Market Potential in Andhra Pradesh and Telangana 

The paper and allied products market in Andhra Pradesh and Telangana is expected to grow at a CAGR of 8.2% from 2019 to 2025, reaching a value of $2.4 billion by 2025, according to a report by The Business Research Company. The growth of the market is driven by the increasing demand for paper and paperboard products in various end-use industries, such as packaging, printing, education, hygiene, and healthcare. The market is also influenced by the availability of raw materials, skilled labor, infrastructure, and government support. The tissue and hygiene paper segment is expected to account for the largest share of the market, followed by the specialty paper segment, due to the growth of the population, urbanization, income, and awareness. The major players in the Andhra Pradesh and Telangana market include Andhra Paper, Ballarpur Industries, International Paper APPM, N R Agarwal Industries, and Sirpur Paper Mills. 

Growing Demand 

The paper and allied products industry is witnessing a growing demand for various types of paper and paperboard products, such as: 

• Packaging and industrial papers: These include paper and paperboard products that are used for packaging, wrapping, cushioning, and protecting various goods and products. These include corrugated boxes, paper bags, cartons, envelopes, labels, and tapes. The demand for these products is increasing due to the growth of the e-commerce, food and beverage, pharmaceutical, and consumer goods industries. These products also offer advantages such as recyclability, biodegradability, and cost-effectiveness over other packaging materials, such as plastic, metal, and glass. 
• Printing and writing papers: These include paper and paperboard products that are used for printing, writing, copying, and publishing various documents, books, magazines, newspapers, and stationery. The demand for these products is increasing due to the growth of the education, office, and communication sectors. These products also offer advantages such as versatility, durability, and readability over other media, such as e-books, e-newspapers, and e-magazines. 
• Tissue and hygiene papers: These include paper and paperboard products that are used for personal hygiene, sanitation, and health care purposes. These include toilet paper, facial tissue, paper towels, napkins, diapers, and sanitary pads. The demand for these products is increasing due to the growth of the population, urbanization, income, and awareness. These products also offer advantages such as convenience, comfort, and safety over other alternatives, such as cloth, sponge, and water. 
• Specialty papers: These include paper and paperboard products that have specific properties or functions, such as water resistance, fire resistance, tear resistance, and thermal insulation. These include filter paper, security paper, wallpaper, and paperboard for electrical and electronic applications. The demand for these products is increasing due to the growth of the industrial, technical, and niche markets. These products also offer advantages such as customization, innovation, and value addition over other standard products. 

Market Size and Growth Projections 

The table below shows the market size and growth projections for the paper and allied products industry in terms of volume (million tons) and value (billion dollars) for the global, Indian, and Andhra Pradesh and Telangana markets. 

Subsidies and Incentives 

Government of India 

The government of India provides various subsidies and incentives to the paper and allied products industry, such as: 

• Capital subsidy: The government provides a capital subsidy of 25% of the project cost, subject to a maximum of $1.3 million, for setting up new units or expanding existing units in rural areas. This subsidy is applicable for the purchase of plant and machinery, land and building, and other fixed assets. 
• Interest subsidy: The government provides an interest subsidy of 3% on the term loan and working capital loan for a period of five years for setting up new units or expanding existing units in rural areas. This subsidy is applicable for the loans taken from banks, financial institutions, or co-operative societies. 
• Tax exemption: The government provides a tax exemption of 100% of the profits and gains for a period of 10 years for setting up new units or expanding existing units in rural areas. This exemption is applicable for the income tax and corporate tax. 
• Technology upgradation: The government provides a grant of 20% of the cost of technology upgradation, subject to a maximum of $0.3 million, for adopting cleaner and energy-efficient technologies. This grant is applicable for the purchase of new or improved equipment, machinery, or processes. 
• Research and development: The government provides a grant of 50% of the cost of research and development, subject to a maximum of $0.2 million, for developing new products, processes, and technologies. This grant is applicable for the expenditure on research and development activities, such as laboratory testing, pilot plant trials, and patent registration. 

Government of Andhra Pradesh 

The government of Andhra Pradesh provides various subsidies and incentives to the paper and allied products industry, such as: 

• Power subsidy: The government provides a power subsidy of $0.02 per unit of electricity consumed for a period of five years for setting up new units or expanding existing units in rural areas. This subsidy is applicable for the power consumed from the grid or from captive power plants. 
• Water subsidy: The government provides a water subsidy of 50% of the water charges for a period of five years for setting up new units or expanding existing units in rural areas. This subsidy is applicable for the water consumed from the public or private sources. 
• Stamp duty exemption: The government provides a stamp duty exemption of 100% for the purchase of land and buildings for setting up new units or expanding existing units in rural areas. This exemption is applicable for the stamp duty paid for the registration of land and buildings. 
• Registration fee exemption: The government provides a registration fee exemption of 100% for the registration of land and buildings for setting up new units or expanding existing units in rural areas. This exemption is applicable for the registration fee paid for the registration of land and buildings. 
• VAT reimbursement: The government provides a VAT reimbursement of 100% for a period of five years for setting up new units or expanding existing units in rural areas. This reimbursement is applicable for the VAT paid on the purchase of raw materials, intermediate goods, and finished goods. 

Government of Telangana 

The government of Telangana provides various subsidies and incentives to the paper and allied products industry, such as: 

• Investment subsidy: The government provides an investment subsidy of 15% of the fixed capital investment, subject to a maximum of $0.6 million, for setting up new units or expanding existing units in rural areas. This subsidy is applicable for the purchase of plant and machinery, land and building, and other fixed assets. 
• Power cost reimbursement: The government provides a power cost reimbursement of 20% of the power cost for a period of five years for setting up new units or expanding existing units in rural areas. This reimbursement is applicable for the power cost incurred from the grid or from captive power plants. 
• Interest subsidy: The government provides an interest subsidy of 3% on the term loan and working capital loan for a period of seven years for setting up new units or expanding existing units in rural areas. This subsidy is applicable for the loans taken from banks, financial institutions, or co-operative societies. 
• Tax refund: The government provides a tax refund of 100% of the SGST paid for a period of seven years for setting up new units or expanding existing units in rural areas. This refund is applicable for the SGST paid on the purchase of raw materials, intermediate goods, and finished goods. 
• Land cost rebate: The government provides a land cost rebate of 20% of the land cost, subject to a maximum of $0.2 million, for setting up new units or expanding existing units in rural areas. This rebate is applicable for the land cost paid for the purchase of land. 

Marketing and Sales 

The paper and allied products industry faces various challenges and opportunities in marketing and sales, such as: 

• Competition: The industry faces intense competition from domestic and international players, as well as from substitute products, such as plastic, metal, and glass. The industry needs to adopt strategies such as product differentiation, quality improvement, cost reduction, and customer satisfaction to gain a competitive edge. The industry also needs to monitor the market trends, customer preferences, and competitor activities to identify the opportunities and threats. 
• Demand: The industry faces fluctuating demand due to the seasonal and cyclical nature of the end-use industries, such as packaging, printing, education, hygiene, and healthcare. The industry needs to adopt strategies such as demand forecasting, inventory management, and flexible production to cope with the demand variations. The industry also needs to segment the market, target the customers, and position the products to meet the customer needs and expectations. 
• Regulation: The industry faces stringent regulation from the government and environmental agencies, such as the Pollution Control Board, the Forest Department, and the Ministry of Environment and Forests. The industry needs to adopt strategies such as compliance, innovation, and sustainability to meet the regulatory requirements. The industry also needs to communicate the benefits and features of the products to the stakeholders, such as the customers, the regulators, and the society. 
• Distribution: The industry faces challenges in distribution due to the bulky and fragile nature of the paper and paperboard products, as well as the lack of adequate infrastructure, such as roads, railways, ports, and warehouses. The industry needs to adopt strategies such as logistics optimization, outsourcing, and e-commerce to improve the distribution efficiency. The industry also needs to select the appropriate channels, intermediaries, and modes of transportation to deliver the products to the customers. 
• Promotion: The industry faces challenges in promotion due to the low awareness and perception of the paper and paperboard products, as well as the negative impact of the digital media, such as e-books, e-newspapers, and e-magazines. The industry needs to adopt strategies such as branding, advertising, and social media to enhance the promotion effectiveness. The industry also needs to use the appropriate tools, techniques, and platforms to communicate the messages to the customers. 

Production Scale and Investment 

The table below shows the production scale and investment for the paper and allied products industry in terms of capacity (kg/hour), fixed capital investment (rupees), and working capital investment (rupees). The table assumes a 25% margin of safety, a 70% capacity utilization, and a 12% interest rate.