The paper industry's import volume increased by 30 percent during the April-September period.
Jute stocks, too, gained. Ludlow Jute was locked in 5 percent upper circuit at Rs 85.60 on the BSE.
Following the crackdown on single-use plastics, paper and jute sectors stocks have rallied sharply. The government could announce incentive to boost new technology and increase capacity of these sectors, CNBC-Awaaz quoted sources as saying.
A committee formed for the 12th five-year plan has suggested a technology modernisation assistance programme (T-MAP) for paper and pulp sector, sources said. The government could offer loans at lower interest rates for these eco-friendly industry, sources said.
The government could also look into the Indian Paper Manufacturers Association (IPMA) demand for an increase in the import duty in the budget, sources said.
The import volume of the paper industry increased by 30 percent in the April-September period.
CNBC-Awaaz said that the finance ministry told the textile ministry to treat jute as an eco-friendly material.
In an interview to CNBC-TV18, Star Paper Mills Chairman GP Goenka said he would be surprised to see any announcement for the paper industry in the budget."I am seeing an uptick in demand as a busy season approaches. Higher imports at lower cost have been impacting the overall paper industry," he said.
Exclusive offer: Use code "BUDGET2020" and get Moneycontrol Pro's Subscription for as little as Rs 333/- for the first year.