Lokta paper (from the Daphne shrub or Lotka bush) production relies on a ready supply of Daphne bark as it does on the skills of traditional paper makers and block printers who apply patterns to the paper. There are four main steps: 1) harvesting the lokta bark 2) processing the paper pulp 3) producing craft products like prayer flags and book binding from the finished paper 4) marketing . Lokta bushes grow well on the southern slopes of Nepal's Himalayan forests between 5,250–13,000 ft. After harvesting, the lokta bush automatically regenerates to a fully grown 4-5 meter plant within 5–7 years.

Historically the handcrafting of lokta paper occurred in the rural areas of Nepal, but today raw lokta paper is produced in more than 22 districts. The production of finished lokta paper products remain in Kathmandu and Janakpur. The poor rural women of Nepal have traditionally been the principal forest users and workers of lotka as many men are leaving the villages in search of employment.

Given lokta paper's durability and resistance to tearing, humidity, insects and mildew, this traditional paper is preferred for the recording of official government records and sacred religious text.