India prints 15 billion pieces of currency annually, of which up to 12 billion are printed on foreign-made paper. The paper used for the currency is cotton-based, and has the advantage that it cannot be easily replicated, yet has the touch and feel of paper.

The ink, on the other hand, is imported from a Swiss company SICPA. An RBI official told dna that SICPA supplies most countries with ink for printing currency.

Currency paper manufacturing factory (in Mysore) was in advanced stages

At present, besides the paper and the ink, even the printing machines are imported. While the paper is imported after floating global tenders from countries such as Germany and England, the printing machines are imported from Japan and Switzerland.

Import costs of paper, ink and printing machines account for about 80% of the cost of printing the notes in India.

http://www.dnaindia.com/money/report-why-videshi-paper-for-swadeshi-currency-pm-narendra-modi-asks-reserve-bank-of-india-2074240

http://www.sicpa.com/company-heritage/company