India’s Paper Sector Gets Largest FDI In India Ever

Asia Pulp and Paper (APP) is about to set up India’s largest mill with an astounding capacity of five million tonnes per annum. The total investment will amount to roughly 3.5 billion dollars.

On January 9, a Memorandum of Understanding (MoU) was signed between the Asia Pulp and Paper (APP) and The Andhra Pradesh Economic Development Board (APEDB) to set up the county’s largest paper mill in the state with a capacity of five million tonnes per annum. The investment amounting to 3.5 billion dollar or Rs. 24,000 crores roughly, is one the largest foreign direct investments in the recent times.

The paper market in India has a market size of around 17.1 million tonnes (as of end FY 2018). One of the fastest growing paper market globally, it has expanded at a compounded annual growth rate (CAGR) of 6.3 per cent over ten years.

A domestic paper demand continues to be stable thanks to an increased demand from the FMCG and packaged food sector and the fast- growing e- commerce sector that includes the likes of Amazon and Walmart owned Flipkart.

JK Paper, International Paper APPM, who were dominating the market pace have so far reaped benefits of the positive demand-supply scenario.

Asia Pulp and Paper’s future capacity additions is bound to have an impact on the supply- demand scenario. It will also have an impact on the competitive intensity of the industry.

Although, there is still a few years for Asia Pulp and Paper to hit the markets, its production could still impact prices and margins incumbents in future. The completion of the capacity expenditure (capex) plans are scheduled for after April 2020.