How to Start Paper Recycling Business: A Potential Small-Scale Business with High Market Demand

Products that were made from recycled paper have a huge demand in the global market. Today paper recycling business is one of the potential business ideas that has extensive opportunities in the FMCG and Packing industry and the demand for recycled products is going to skyrocket in the future This article will help you better understand the various steps involved in setting up a Paper recycling company such as business plan, opportunities, investment, market scenario, manufacturing process, and profitable aspects.

How does Paper recycling business work?

A paper recycling center collects enormous amounts of scrap paper which is usually obtained from various sources such as newspapers, books, brochures, and shredded paper waste from commercial units. This scrap paper is bought to the recycling plant where they undergo multiple steps of treatment that finally turn into a semi-liquid substance called pulp. This pulp is finally used to make various products such as recycled papers, paper bags, paper plates cartons, cardboard boxes, and envelopes. These products are in turn sold to various sectors for a good profit margin.

Paper recycling business

What makes Paper Recycling Business a Profitable One?

Scrap paper which is the key raw material required for paper recycling is the cheapest source. It is also available abundantly throughout the world. The machinery used for paper recycling comes with a wide variety of specifications and sizes

Moreover, one can purchase the entire machinery set-up at an economical price such that it fits a small-scale business budget.

One can make a wide variety of recycled materials from recycled paper such as cardboard boxes, corrugated boxes, paper plates, napkins, paper towels, egg cartons, newspaper, and magzines, etc., considering the diverse products one can make from recycled paper as well as the ease of manufacturing process; paper recycling is considered a profitable business.

To put it in a simpler way, 1 Kg of waste paper price ranges anywhere between 5 to 15 rupees, this waste paper once recycled can make products such as paper bags or envelopes that can be sold at a higher price.

The main profitable aspect of paper recycling is, the main raw material (Scrap paper) is available at a very cheap price, and the end products made from this source are usually sold at a high price leaving a good profit margin for the manufacturer.

How much is it required to Start a Paper Recycling Business?

A small to medium-scale paper recycling business requires around 15-30 Lakhs of investment. The major portion of the investment goes to the paper recycling machines which would cost about 50% of the investment and the remaining investment goes for daily business operations, raw materials, wages to workers, water supply, and marketing

Once the unit is up and running you would need to spend around 1 Lakh every month to run the recycling center which includes buying scrap paper, salary to workers, water and electricity bill,s and maintenance charges

How To Start a Paper Recycling Business – Key things to be Checked

Let us now find out the major steps that were involved in starting a paper recycling business. These steps are usually mentioned when creating a business plan or preparing a feasibility report for funding purposes.

1. Creating an Initial Business Plan for Your Paper Recycling Unit

The first and foremost step in setting up a paper recycling Unit is to decide on a business plan on how you want to operate the business.

This mainly focuses on your budget capability; which means, how much capital you can invest or how much loan you might need to borrow to set up the business etc.,

Based on your investment various things get influenced such as the manufacturing process, machinery, raw material, workers, location, Products, and marketing. Those who were new to the business might find it hard to analyze all such requirements; Hence we have tried our best to help you walk through the process of setting up a small-scale paper recycling unit in the below steps.

2. Resources Required to Start a Paper Recycling Unit

Here are five major resources to run a paper recycling company

  1. Land
  2. Water
  3. Electricity
  4. Paper recycling machinery
  5. Workers


A small-scale paper recycling unit requires around 1200 sq. ft – 1500 sq. ft of space. This can easily accommodate space for a small-scale paper recycling unit with a 25 to 75 kg output capacity and also ample space for drying and storing the materials.


This is the most important requirement for a Paper recycling unit. A small-scale paper recycling center with around 25 to 75kg production capacity would consume around 1000 to 2500 liters of water every day. So, you need to ensure there is a good amount of water supply to your unit. At the same time, it would be a great idea if you can also set-up a small-scale ETP(Effluent Treatment Plant) that can help to treat the wastewater and reuse it for processing the waste paper.


Paper recycling is done with multiple types of machinery and each machine runs on specific power consumption. Depending upon your production capacity and machinery type one must choose how much power supply is required for their unit. A small-scale paper recycling company with 50 kg output requires at least a 3-Phase power connection

Paper Recycling Machinery

There are 7 different types of machines used in the process of paper recycling and below is the list of each item and their use

Paper shredderUsed for cutting the scrap paper into smaller pieces
Hydra PulperUsed to turn the wet paper into pulp
Beater machineUsed to turn the cloth fibers into pulp
Uni-VatHelps turn the pulp into a sheet
Screw pressRemove excess water from sheets
Calendaring machineUsed for smoothing and compressing the paper
CutterHelps cut the paper sheet into various sizes
Paper recycling machinery details along with their uses

These items are available in automation-grade and semi-automatic models. The entire set-up would cost around 10 – 15 Lakh rupees.

Again, these totally depend upon your production capacity. Usually, paper recycling machinery can be seen in three different categories a small-scale unit with 25kg/per day; Medium scale unit with 75 Kg/per day, and Large scale paper recycling centers which are usually called paper mills as their production capacity can be as high as 10 – 100 ton/day.


It requires around 5 workers to run a paper recycling center with 50 kg to 75kg production capacity. In most of the scenarios, manual work is highly required during the initial stages of the process which involves sorting the scrap paper and mixing them with water and chemicals and then feeding it to the pulper and then, during the calendaring phase. Where the worker needs to precisely cut the paper into the correct size.

There is also no special requirement to have a technician for the unit. Even if there is a technical problem, you will be trained by the company service team on some minor fixes that you can do by yourself. However, if there is an issue that leads to the breakdown of machinery, most companies would send out their technician within no time.

3. Paper Recycling Manufacturing Process

There are 5 key steps involved in manufacturing of recycled paper

Step 1: Collection of Scrap Paper

This is the first step of the paper recycling process. Usually, scrap paper is purchased in large quantities from various sources such as scrap yards, scrap paper sellers, commercial areas like offices, malls, and markets, etc.,

In the collection process, one must first decide what type of scrap paper one would like to recycle. This is a very important step because not all type of scrap is suitable for paper recycling.

Especially, if you are running a small scale paper recycling plant you must focus on obtaining scrap paper that is easy to process such as newspaper, notebook paper, and kraft paper, or corrugated paper. These types of paper are not only easy to recycle but also comes at cheap price. For example, 1kg of scrap paper price ranges from 5 – 10 and 20-25 if it is a newspaper.

There are also paper materials that are hard to recycle and may not be a feasible option for recycling such as

  • Plastic coated paper
  • Sticky notes
  • Gift wrappers
  • Thermal papers
  • Wax coated papers
  • Milk tetra packs

Although they can be recycled it takes consumes a lot of energy and requires large-scale machinery which is very expensive and not recommended for small paper recycling plants.

Step 2: Processing of Scrap Paper

Once the recycled paper is procured from waste recyclers; it further undergoes segregation to make sure there is no debris or plastic waste or metal items like pins, nails, or staples that come during the processing of paper pulp.

This process is mostly done in manually way and requires at least two workers. After segregation of the paper is done, it will be further cut into small pieces either by manual cutting process or fed into paper shredder that finally turns the paper materials into small pieces which makes it easy for pulping process.

Step 3: Turning the Scrap paper into Pulp

The scrap papers are then fed into a machine called “Hydrapulper” or “Hydropulper” it is a high powerful agitating machine that breaks down the fibers under hot temperatures. Usually, in this step, the scrap papers are fed into a Hydropulper machine and then chemicals such as Rosin and Alum are added to improve the bonding capacity of paper

Bleaching of Pulp – is used to improve the color of the pulp; basically, it improves the brightness of the paper pulp. Chemicals like Hydrogen peroxide and Sodium dithionite are commonly used, bleaching agents.

Although, Bleaching agents were used in the paper recycling process for several years. Recent studies show that they pose environmental concerns. Hence you can see several notebook manufacturers were adapting for bleach free processing

Sizing Agents – Rosin and Alum are commonly used sizing agents; the sizing agents help water absorbency of the paper and also reduce ink bleed. They are also used to improve the writing performance and printability of the paper

General Composition for Bonding recycling paper pulp

Paper WasteSizing Agent (*Rosin) in GramsAlam Powder in Grams
1 Kg3060
2 Kg60120
3 Kg90180
5 Kg150300
6 Kg180360
Composition of binding agents for paper recycling

Step 4: Making Paper Sheets from Pulp

Once the pulp is extracted it is then transferred to “Uni-Vat” it is a manually operated equipment that helps to turn the pulp into sheets. Uni-vat has a tank-like structure where it is filled with water and has a metal mesh connected to lifting rods. Once the pulp is equally spread across the metal mesh it is lifted slowly to a certain height where the water is filtered, and the pulp extract is equally spread across the sheet.

Later, the pulp is transferred to a Screw Press which applies high amount of pressure on the pulp and removes excess water content and finally giving it a sheet like shape. These paper sheets are dried for a duration and were finally subjected to “Calendaring” process. In Calendaring process, the paper sheets were passed through series of rollers under high pressure that compress them giving a smooth texture to the paper.

In addition to having a Uni-vat machine; one can also install “Paper Board Making Machine” that is used to make paper folders, paper bags and thicksheets this is mostly available in automation grade where, the machine consists of series of rollers that turns the pulp into thick sheets which are suitable for making paper bags and folders

Step 5: Turning the Paper Sheets into End Products

In the final step the paper sheets were dried and then cut into required sizes by cutting machine. These sheets were later transformed into end products like post cards, paper bags, paper file folders, phonebooks etc.,. With the use of printing machine you can even print your company name and details on these products.

Profitable Aspects of Paper Recycling Business

The paper recycling business provides a decent profit margin as a small scale business. The availability of cheap raw material and the low cost machinery adds value to this business. Although the revenue from a small scale paper recycling plant may not be a big but it can provide a decent income business.

So what are the possible strategies to increase the return on investment from the Paper recycling business?

Option 1: In the general recycled paper are generally of high thickness this paper material can also be used to make paper plates. You can purchase manual or semi automatic paper plates making machine which can cost you around 30,000 rupees. Paper plates have a good demand in the market a good quality paper plates can sell 20 – 30 per 100 pieces.

Option 2: good quality high thickness recycled paper can be used to make paper folders, paper bags, and envelops. These items come under stationery supplies. On average paper folder price starts from 5 rupees and can sell upto 10 per piece.

A part from this you can also manufacture paper bags. On average a normal quality paper bag price starts from 3 rupees and a high-quality printed paper bag can sell up to 20 per piece

There are also numerous ways you can can utilize your recycled paper, such as making grocery paper bags. They have good demand in supermarkets. 1 kg of grocery paper bags can cost upto 100 rupees

One must also not forget that marketing is the most important thing in paper recycling business. Although you might be busy figuring out the production process or running the recycling plant; You must not neglect marketing of your company and its products

Communication and connections are key factors to get success in this business. You must have good connections with stationary, novelties and general store owners because these are the areas where recycled paper products are mostly used

Please also note that there are already a good number of recycling plants located in every city and town. Getting connected to these business owners can increase your circle and can help in scaling up of your business.

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2 thoughts on “How to Start Paper Recycling Business: A Potential Small-Scale Business with High Market Demand”

    • Hello Sunil, for paper plate-making machinery you can search on the internet in sites like India mart. However, if you want to start the business; please check out with MSME in your locality


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