JK Paper, West Coast Paper: Why paper stocks are seeing a stellar rally today

Tamil Nadu Newsprint & Papers shares were trading at ₹170.83, up 11.26%.

The reason behind a sharp rally in paper stocks is the government action on the import of certain paper products.

Through Notification No. 26/2025-26 issued on August 22, 2025, the government has made compulsory registration under the Paper Import Monitoring System (PIMS) mandatory for specified HS codes and imposed a Minimum Import Price (MIP) of ₹67,220 per MT on Virgin Multi-layer Paper Board (VPB) imports till March 31, 2026.

Virgin Multilayer Paperboard (VPN), or Virgin Fibre Paperboard, is primarily used for high-end packaging of food, beverages, pharmaceuticals, cosmetics, and electronics due to its superior strength, brightness, and printing capabilities, which come from being made of 100% virgin wood pulp.

It is also used in graphical arts for things such as book covers and as material for disposable cups.

This led to a sharp spike in the share price of domestic paper manufacturers.

What lies ahead for the Indian paper market?

The research firm notes the demand for paper is particularly strong in packaging (for cartons, corrugated boxes, and paper bags), education (for books and notebooks), and hygiene products (tissues and sanitary napkins).

Industrial hubs in states such as Maharashtra, Tamil Nadu, and Gujarat have seen notable growth in paper consumption due to advancements in packaging and an increased focus on eco-friendly alternatives.

Moreover, JK Paper has announced plans to invest $100 million by 2026 to expand its production capacities and enhance sustainability practices. This investment includes capital expenditures at its existing plants and aims to improve energy efficiency and reduce resource consumption, such as water and coal.

Rise in Demand for Sustainable Packaging Solutions

With the government's stringent regulations on single-use plastics, demand for sustainable and biodegradable packaging has surged.

In 2023, the Indian packaging industry recorded a substantial rise in the use of paper-based materials due to a ban on plastic bags and packaging materials.

Increased Demand from the Education Sector

The government's continued focus on improving literacy rates through programmes like Samagra Shiksha Abhiyan has driven up demand for printing and writing paper.

In 2024, the Department of Higher Education allocated $5.8 billion to improve educational infrastructure, including the provision of textbooks and other learning materials.

"This investment is expected to boost the demand for paper products across schools and higher education institutions, especially as India continues to expand its educational outreach to rural areas," the report adds.

Surge in E-commerce and Food Delivery Industries

According to a report by Statistica.com, owing to the increasing internet user base and favourable market conditions, India has a lot of potential in the e-commerce industry. Growing at an exponential rate, the market value of the e-commerce industry in India was 125 billion US dollars in 2024. This number is estimated to reach 550 billion US dollars by 2035.

Research says quick commerce with faster deliveries is expected to grow significantly in non-metro cities. While quick commerce becomes the preferred medium for immediate needs and impulse purchases, e-commerce is favoured for more planned purchases like home, beauty and personal care.

This expansion has driven demand for corrugated boxes and paper-based packaging products. Additionally, the penetration of online food delivery in India increased from 8% to 12% between 2019 and 2023; this increase reflects a 2.8 times growth compared to overall food services during the same period. This has increased its use of sustainable paper packaging to comply with the ban on plastic packaging, Ken Research notes further.