UP’s MSME box units hit by 30% kraft paper price rise, 1 lakh jobs at risk

A sharp and continuous increase in kraft paper prices has deepened the crisis in Uttar Pradesh’s corrugated box industry, with manufacturers warning that nearly one lakh jobs could be affected if the situation persists, say the industry stakeholders.

Kraft paper prices have increased by more than 30% during August and September, according to the Uttar Pradesh Corrugated Box Manufacturers Association (UPCBMA), while manufacturers say they have been unable to pass on the higher costs to customers at the same pace.

For the uninitiated, kraft paper is a strong, durable and tear-resistant paper made from wood pulp using the chemical kraft pulping process.

Corrugated box manufacturers across Uttar Pradesh who are members of the association decided in the late night Monday meeting in Noida to stop purchasing kraft paper from paper mills for the next 10 days and operate using their existing stocks.

S K Chauhan, President, UPCBMA, said the weekly increase in kraft paper prices had made it increasingly difficult for manufacturers to operate profitably.

“While kraft paper prices are increasing every week, it is practically impossible for corrugated box manufacturers to demand a corresponding increase in box prices from buyer companies every week,” Chauhan said.

Manufacturers said they had already increased corrugated box prices by around 10%, but this has not been sufficient to offset the rise in input costs.

The industry is now preparing to reduce production depending on the requirements and financial position of individual manufacturing units.

According to Chauhan, Uttar Pradesh has around 3,000 corrugated box manufacturing units employing nearly two lakh people. If production cuts continue, around 50% of the workforce could be temporarily sent home, potentially putting nearly one lakh jobs at risk.

The impact could be particularly significant ahead of the festive season, when demand for packaging typically rises.

Earlier in September this year, the Coimbatore chapter of the South Indian Corrugated Box Manufacturers Association (SICBMA) announced a 20% increase in corrugated carton box prices, citing a sharp rise in raw material and operational costs.

Multiple input costs rise

The increase in kraft paper prices is part of a broader rise in manufacturing costs faced by the industry over the past two to four months.

According to data shared by the industry, kraft paper prices have increased by around 30%, while adhesives have risen 25%. Stitching wire and other consumables have increased by around 20% each, while lamination film prices have risen by as much as 40%.

The industry has also cited higher labour costs, with wages increasing by around 20-30%, along with an additional provident fund-related burden estimated by manufacturers at around 20% of salary. The combination of higher raw-material, labour and statutory costs has significantly increased the cost of producing corrugated boxes, manufacturers said.

The industry has reported that several key input costs have risen sharply over the past two to four months. Kraft paper prices have increased by around 30%, while adhesives have risen by 25% and stitching wire and other consumables by about 20% each. Lamination film has seen the steepest increase of around 40%. In addition, labour wages have risen by 20-30%, while manufacturers are facing an additional provident fund (PF) burden estimated at around 20% of salaries.

Rajendra Bhati, President, Federation of Corrugated Box Manufacturers, said manufacturers across the country were concerned over the continued increase in kraft paper prices.

“The situation is now reaching a stage of agitation. If the rising prices are not controlled, the industry may be forced to take stronger measures, including large-scale production cuts,” Bhati said.

The 10-day decision to stop fresh purchases of kraft paper is being seen by manufacturers as an initial collective response to the price increases.

Corrugated box manufacturers from Uttar Pradesh, Himachal Pradesh, Punjab, Haryana, Uttarakhand, Rajasthan and Delhi are also scheduled to meet on October 9 in Kundli, Haryana, to discuss a broader response. The meeting is expected to consider further collective measures against continued price increases and what manufacturers describe as arbitrary pricing practices by some paper mills.

GST structure adds to pressure

The industry is also seeking relief from what it describes as an inverted GST structure, which it says has added to the financial burden on corrugated box manufacturers.

Bhati said the issue had been raised with officials in the Ministry of Finance and the industry was hopeful of relief in the forthcoming GST Council discussions. “Corrugated box manufacturers across the country are facing severe difficulties due to the continuous rise in kraft paper prices. The issue has reached a critical stage and the possibility of a nationwide industry movement is increasing,” Bhati said.

Meanwhile, the 57th GST Council meeting will be held on October 8, 2026, at Bharat Mandapam in New Delhi, after being rescheduled from October 7.