Paper Manufacturers Association Seeks Prime Minister’s Intervention Over Coal Shortages and Rail Rake Irregularities

The Indian Paper Manufacturers Association (IPMA) has sought the urgent intervention of the Prime Minister to address a severe shortage of coal supplies and the irregular availability of railway rakes. According to the association, dwindling fuel stocks and escalating costs are posing a direct threat to the operations of paper mills across the country.

IPMA reported that coal costs have surged by more than 50% over the past two months. This sharp increase has raised serious concerns that several mills may be compelled to suspend production due to commercial unviability.

In its appeal, the association has requested the priority allocation of coal and railway rakes to captive power plants within the pulp and paper industry, placing them on a par with thermal power plants. Additionally, IPMA urged the government to ensure the regular supply of at least 75% of the coal quantities covered under existing Fuel Supply Agreements (FSAs) or linkages.

Energy constitutes approximately 15% to 20% of the total cost of paper production. The recent surge in coal prices has added significant pressure to manufacturers who are already navigating intense competition from imported paper and paperboard.

Pawan Agarwal, President of IPMA, emphasized that assured coal supplies are vital for maintaining continuous paper production. Mills depend on uninterrupted supplies of steam and electricity, meaning any uncertainty in fuel availability directly impacts operational capabilities.

Due to inadequate coal allocation under existing fuel supply agreements and insufficient railway rake availability, paper mills have been forced to rely on costly alternatives. Manufacturers are procuring coal through imports, open markets, and auctions at substantially higher prices.

Agarwal noted that domestic manufacturers find themselves caught between rising production costs and competitive pressures from imported paper and paperboard. With limited ability to pass these increased fuel costs on to customers, operating margins and overall business viability are coming under severe strain.

To stabilize the sector, IPMA has called for coordinated action involving the government, Coal India along with its subsidiaries, and the Railways. The requested measures aim to restore predictable coal dispatches, secure adequate rake availability, and maintain regular supplies under current fuel supply arrangements.

"The current supply constraints and rising fuel costs highlight the vulnerability of traditional manufacturing sectors to input price volatility. When core production inputs like energy account for up to 20% of total costs and experience a 50% price surge, operating margins inevitably collapse. For asset-heavy industries like paper manufacturing, predictable supply chains and structured logistics support, such as reliable railway rake allocations, are critical to maintaining operational continuity against import competition." — Dr. Shishir Gupta, Founder & CEO, StartupLanes