Wood fibre constraints pose growing risks for India’s packaging and textile supply chains, warns Canopy

Nicole Rycroft, Founder and Executive Director of Canopy, explains how tightening global pulp supply and new EU regulations could impact Indian exporters

National, India, 15 January 2026: Growing constraints on global wood fibre supply are creating mounting risks for India’s packaging and man-made cellulosic fibre textile supply chains, according to a new issue brief released by Canopy in partnership with Finance Earth. Titled Paper Thin Comfort: Wood Fibre Risk in a Finite Forest World, the brief examines how rising demand, climate pressures, and regulatory changes are converging to challenge India’s export-oriented manufacturers.
The analysis comes at a time when India’s paper demand is increasing by nearly one million tonnes annually, while sectors such as e-commerce packaging and MMCF textiles including rayon and viscose grow more dependent on imported wood pulp and recovered fibre. The brief cautions that tightening global wood availability, combined with climate-driven disruptions, could raise cost, continuity, and compliance risks across supply chains.

The issue brief highlights that Asia’s paper production grew by 60 percent between 2000 and 2021, intensifying competition for finite forest resources. At the same time, demand from bioenergy, construction, and packaging continues to outpace sustainable wood supply. Climate stressors such as wildfires, land-use pressures, and ecosystem degradation are further constraining pulp availability, increasing India’s exposure as reliance on imported fibre rises.
A key concern flagged in the brief is the European Union Deforestation Regulation, which comes into effect in December 2026. The regulation will require exporters to certify products as deforestation free, introducing new compliance and market access challenges for Indian exporters supplying textile hubs such as Tiruppur and Ludhiana, as well as packaging clusters serving e-commerce, food, and FMCG sectors.

Commenting on the findings, Nicole Rycroft, Founder and Executive Director of Canopy, said India holds a strategic opportunity to strengthen fibre security by scaling alternatives such as agricultural residues and recycled textiles. She noted that materials like sugarcane bagasse and rice straw could help reduce pressure on global forests while improving resilience and competitiveness for Indian industry.
The brief identifies three core risk areas for Indian manufacturers. Rising global demand is increasing price volatility for wood-based inputs across the country’s textile and paper ecosystem. Supply constraints driven by climate stress and land competition are limiting wood quality and availability, exacerbating India’s low waste paper recovery rate. Meanwhile, evolving environmental and human rights due diligence requirements are likely to add to compliance costs for exporters serving regulated markets.

To address these challenges, the brief outlines a framework focused on scaling circular fibre alternatives, strengthening wood sourcing through certification and traceability, and applying scenario planning to anticipate regulatory and climate shocks. Canopy stated that it will engage with Indian brands, manufacturers, investors, policymakers, and innovators to accelerate adoption of these measures, with the objective of protecting forests while reinforcing India’s position as a low-risk supplier in global markets.

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