West Asia Crisis Raises Energy Costs, Export Concerns for Indian Paper Industry

The Indian paper industry is facing mounting pressure as escalating geopolitical tensions in West Asia drive up energy costs and threaten export flows to key markets, according to industry stakeholders.

West Asia remains a crucial destination for Indian paper and paperboard exports. In FY2024–25, India exported paper and paperboard worth approximately USD 980 million, with nearly USD 290 million—around 30%—shipped to West Asian markets, highlighting the region’s strategic importance for Indian manufacturers.

Industry experts warn that the ongoing crisis could significantly raise production costs for paper mills, which are highly energy-intensive. Disruptions in the supply of fuels such as LNG, PNG, propane and LPG have already begun affecting industrial operations across the country. These fuels are critical for powering manufacturing processes in paper mills and related industries.

The sector is also facing challenges in sourcing key chemicals used in paper production, including hydrogen peroxide and binders, further tightening operational conditions for manufacturers and downstream users.

Beyond cost pressures, industry leaders caution that trade disruptions could intensify competition in the domestic market. Export-oriented producers in countries such as China and Indonesia, which also rely heavily on West Asian markets, may divert surplus inventories to India if their shipments to the region decline. This could lead to increased imports at lower prices and further strain domestic producers.

“The paper industry, which is closely linked to global trade flows and energy markets, is likely to feel the ripple effects of the ongoing geopolitical tensions,” industry representatives said, noting that prolonged disruption could impact both demand and supply chains.

As the situation evolves, industry bodies are closely monitoring developments and assessing their potential impact on production costs, export demand, and overall market stability in India’s paper sector.