The paper industry with an estimated annual turnover of R40,000 crore is passing through a tough phase because of raw material scarcity, rising input prices and a sudden rush of duty-free imports. Sanjay Singh, vice-president, Indian Paper Manufacturers Association, spoke to FE's Sandip Das on the challenges faced by the industry.
What are the issues confronting the industry right now?
The primary challenge is raw material scarcity. India is deficient in wood fibre. Domestic paper producers need to import substantial quantities of wood pulp and waste paper to meet raw material deficit. Notwithstanding the industry’s initiative to promote agro-forestry, wood availability has dwindled and domestic players are compelled to import wood logs or chips, something that has never happened before. The industry imported a million tonne of wood last year at a high landing cost. Raw material pricing is also a major issue. In two years, wood prices have increased by 90%. Raw material prices in India are much higher than other competing paper manufacturing nations such as Indonesia and China. Raw materials make up 35-40% of the cost of paper production and prohibitive cost is hurting the industry.
Are cheap imports from South East Asian countries hurting the industry?
India has signed free trade agreements with South East Asian nations, following which paper imports from countries such as Malaysia, Indonesia, Thailand are now duty free. Unfortunately, the domestic paper industry is at a significant disadvantage for, it has no access to captive plantation to manage raw material cost while players in many South East Asian countries have in-built advantage of conducive production plantation policies and ability to procure wood at a favourable cost. Manufacturers in Indonesia and China enjoy export incentives.
What is the industry doing to change its perception as an environment harming industry?
There is a prevailing myth about the pulp and paper industry. The organised paper industry has laid special thrust on sustainability, unmatched by many other industries. The paper industry is wood positive. We grow more trees than we harvest. We recycle most of the waste paper that is generated. We recycle agricultural waste which otherwise would have been burnt in fields. Integrated paper mills in India generate 60% of the power they use by utilising black liquor from the pulping process. New breakthrough ideas are coming up to recycle effluents. A few years ago, we used to consume 200 cubic metre of water to produce a tonne of paper.