What the Russian timber industry can offer India
In recent years, identifying new markets has been a key priority for the Russian timber industry. India could become one of its most important trade partners in this area with an estimated export potential of around 50 million cubic metres per year, which is approximately a quarter of Russia’s total timber production volume.
The Russian timber industry experienced growth in various segments in 2024. For instance, the plywood market grew by 5.1% and the production of particle boards increased by 20.9% compared to 2023. The woodworking industry demonstrated stable positive dynamics with a 6% increase in production, ranking among the top three fastest-growing industries in Russia, alongside mechanical engineering (+20%) and metallurgy (+7%).
Northern timber
Russian forestry enterprises are currently seeking to expand their sales geography. One of the most promising markets in this regard is India, which may become the world’s third largest economy by 2030.
India generally faces a timber supply deficit, as domestic consumption outpaces its own logging and processing capabilities, notes Valentin Gavrilov, director of the Timber Industry Practice at Strategy Partners consulting firm. “Due to its geographical location, India is unable to harvest high-quality northern coniferous wood. As a result, there is a clear demand for imported goods here, particularly roundwood, sawn timber, wood veneer, panels, and pulp and paper products,” he explains.
Russia holds 20% of the world’s forest resources, ranking second globally after Brazil and boasting reserves twice the size of those in the United States. Three-quarters of Russia’s forests are composed of valuable tree species such as pine, larch, spruce, fir, and cedar. Key industry players include Ilim Group, Segezha Group, Arkhangelsk Pulp and Paper Mill, and Sveza Group.
Main barriers
Valentin Gavrilov further points out that in recent years, the volume of sawn timber exported from Russia to India has ranged between 10,000 and 55,000 cubic metres annually, despite the Indian market’s capacity amounting to tens of millions of cubic metres.
Currently, the main obstacle to increasing exports of Russian forest products to India is high import duties. These, when combined with mandatory taxes, can be as high as 28%. For example, the import duty on Russian pulp and paper products reaches 11.8%, whereas similar goods from countries such as Chile, Indonesia, Thailand, Malaysia, and Australia enjoy preferential rates of 0–2%, significantly undermining Russia’s competitiveness in the Indian market.
Another limiting factor is the high cost of logistics.
Valentin Gavrilov,
director of the Timber Industry Practice at Strategy Partners consulting firm:
The forest products market is primarily a commodities market, where price plays a decisive role in purchasing decisions. In terms of production costs, Russia is in most cases more competitive than Scandinavian countries or Canada. However, logistics costs are also a major factor. When logistics account for 15–20% of the product’s value, Russian goods remain competitively priced. But when these costs approach 30–50%, achieving profitability in export sales becomes extremely difficult—if not impossible. Therefore, reducing logistics costs is crucial for increasing the volume of Russian forest product exports to India.
According to industry estimates, if logistics costs and customs duties were reduced, Russia could export up to 50 million cubic metres of processed roundwood to India, equivalent to a quarter of the timber harvested in Russia. “Although India itself harvests around 300 million cubic metres of timber annually, its market holds significant potential for diverse Russian products, ranging from paper, packaging, and sawn timber to modular housing units and wood pellets as an alternative to coal,” says Nikolay Ivanov, Vice President for the Implementation of State Programmes, Sustainable Development, and Forest Policy at Segezha Group.
Given the pace of India’s economic and industrial production growth, the country is expected to see a rise in consumption of pulp and paper products—primarily corrugated packaging (particularly made from virgin fibre). This increase will be driven by the expansion of e-commerce and rising exports of electronics, vegetables, and fruits—sectors that require packaging with high physical and mechanical performance to ensure product integrity during long-distance transportation. Domestic production of such packaging in India is limited due to low fibre availability and high production costs, which will in turn stimulate imports.
Steps towards closer cooperation
There has already been some progress in the development of trade relations between Russian timber producers and Indian partners, as shown by the official statistics. In October 2024, India imported glued plywood, sawn timber, and other wood products from Russia worth $6.2 million—the highest monthly figure since 2007. In total, exports over the first ten months of 2024 reached $26.6 million, which is 1.5 times higher than in 2023.
According to analysts at Strategy Partners, to unlock the potential for exporting Russian forestry products to India, fairly conventional measures will be required. These include:
According to Ekaterina Mirvoda (Ilim Group), intergovernmental agreements outline a plan to significantly increase trade turnover between the two countries. This lays the groundwork for a potential revision of import duties, enhanced logistics, and the further development of Russian exports to India.
Read this article to learn more about promising areas for Indian exports to Russia.