Indian paper and newsprint industry has a huge potentials and prospects in coming future. In our, country, demand for paper and newspaper is rapidly increasing. There are vast demands in the area of tea bags, filer paper, tissue paper, medical-grade coated paper, lightweight online coated paper, etc. Indian paper industry is one of the underestimated industries, because India's per capita consumption of paper is just about 5 kg. whereas it is 337 kg in North America, 110 kg. in Europe and 30 kg. in China. Compare to this scenario India' par capita consumption is one of the lowest in the World.
The Rs. 22000-crore paper industry in India, rated 15th largest in world engaged about 1.5 million people with the help of Rs. 2500 crore Government subsidy. Government has given paper industry as one of the 35 high-priority lists.
There are about 515 manufacturing units engaged in production of paper, newsprint and paperboards in India with have the annual capacity of 8.3 million tones, which likely to be 16 million tonnes by 2014. There are few state owned and private players in the emerging paper industry like Hindustan Newsprint Ltd(HNL), Tamil Nadu Newsprint and Papers Ltd(TNPL), Ballarpur Industries Ltd (BUILT), Seshasayee Paper & Board Ltd. (SPBL), ITC Paper.
Indian Government has completely delicensed the paper industry under the Industries (Development & Regulation) Act with effect from17th July, 1997. The interested entrepreneurs or existing players now require to file an Industrial Entrepreneur' Memorandum (IEM) with the Secretariat for Industrial Assistance(SIA) for setting up a new paper mill or substantial expansion of the existing mill in permissible locations. The foreign direct investment is allowed upto 100% in paper industry except those who require industrial license with prior approval from Reserve Bank of India.
The biggest stumbling blocks in Indian paper industry:
i. Remove the bottlenecks of good quality of raw materials (forest based wood pulp) and bulk import of waste paper to bridge the gap of short supply of raw materials.
ii. High cost of raw materials and lack of modernization of the manufacturing units.
iii. Rising power and shipping logistics cost and concentration of mills in one particular area.
iv. Quality improvements and reduction
v. No rehabilitations packages for near about 194 small-scale paper manufacturing units, which are sick or lying sick.
vi. Import duty on pulp and waste paper, wood raw materials & technologies etc.
Few promising players in the paper production:
Ballarpur Industries Ltd(BILT), part of the US$ 3 bn Avantha Group, is India's largest manufacturer of writing and printing paper. More than 50% of India's coated wood-free grades roll out of BILT's state-of-the-art plants and machineries. BILT has an impressive 85% share of the bond paper market in India. Not only that BILT is the only Indian paper company to feature in the global top 100 list. Its recent acquisition of Malaysia's Sabah Forest Industries are expected to start operations by 2009-December, end.
Seshasayee Paper & Board Ltd., one of the South Indian based company have been producing Fine Paper since 1960. Now they are commissioning its new pulp production units with an additional investment of Rs. 3,000 million. They are expected to see in-house plup production going up to 440-tonnes a day from 240-tonnes a day. They have the customers over the 20 countries with extensive range of product cater the various customers.
Tamil Nadu Newsprint and Papers Limited (TNPL) owned by the Government of Tami Nadu started early eighties to produce Newsprint and Printing & Writing Paper. The TNPL has initial capacity of 90,000 tonnes per annum. Gradually company has increased its production to 2,45,000 tonnes per annum. Company has emerged as the largest bagasse based Paper Mill in the world consuming about one million tones of bagasse every year. In their forthcoming ambitious project, company has plan to invest Rs. 1000 crore for expanding of production capacity 4,00,000 lakh tonnes from present 2,45,000 tonnes per annum.
ITC Paperboards & Specialty Papers Division is India's largest and most technologically advanced paper and paperboards business. ITC has the wide spectrum products like packaging, graphic, writing, printing and specialty paper through its four world-class mills in India. Company is already pioneered in many specialty applications like cigarette tissues, packaging boards, aseptic cartons and gypsum liners. In their Bhadrachalam plant, it has capacity to produce 4,00,000 tonnes of paper boards. ITC already made public announcement to invest Rs. 25,000-million by 2009 to boost its production capacity to 2 lakh tonnes.
Expectations of the industry from the Government.
The Government has taken several steps to make availability of raw materials and infrastructure development to overcome the shortage of raw materials. Duty on plup waste paper, wood logs/chips has been reduced.
The Indian Paper Mills' Association(IPMA), has suggest to setting up of a Rs. 20,000 crore 'paper fund'. IPMA also, suggested to setting up existing technology upgradation fund (TUF) for improvement of energy conversation, quality upgradation and product improvement.
The Indian paper industry is growing at 8 per cent per annum. It is also, expected to grow by 10 per cent by the year 2010. IPMA also, urged the Government to reduce the excise duty from 12 per cent to 8 per cent for all type of paper mills as they are looking to upgradation of 25 per cent of their capacity.
Indian paper industry has direct linkage with educational sector, manufacturing sector, as a result near about 20 per cent direct and indirect taxation on paper industry including 12% VAT, octroi, etc. Reduction of direct and indirect taxation can make more competitive player in the world.
The following measures can be taken to make Indian Industry more competitive:
(i) For Wood based industry: The Indian paper and newsprint industry already urges the Government to amend the laws for immediate revision of forest policy so that plantation to make use of the degraded land for raising plantations for better quality of plup. But, the Government does not permit forests to be used for sourcing woods by the corporate sector, nor does it allow industrial plantation on degraded forestlands.
(ii) For Waste Paper based Industry: Less export duty on Import of waste paper. Introduction of "Ecolabelling" system where in products made from recycled fibre are rated higher than the products made form virgin fibre. Introduction of modern and effective collection and grading system.
(iii) For Agro based industry: Funds to be made available for technology modernization and processing of agro residue fibre, particularly for small & medium scale paper industries.
Improvements of communication e.g. rail, road, port which will help the entire industrial sector
There is a wide gap between the technologies of the domestic paper industry in India compared to that of the foreign countries. Most of the paper mills are using old technologies, which is serious cause of resultant in low productivity with high costs of production.
(i) Social forestry scheme should be introduced to small and marginal farmers to promote sapling and know-how for raising plantations of fast growing trees with an assurance of a buy back at a remunerative price.
(ii) The industry is also seeking permit duty free imports of new & second hand machinery/equipment for Technology Up gradation.
(iii) Right now, an estimated 55-million begasse is available, but currently we are using only 8%. Begasse can be introduced in replace of using bamboo, rice or white straw.
More uniform cost effective Power Policy for paper production units/mills.
Newsprint prices with unprintable tag:
Virtually paper industry is decontrolled and there is no price control on finished product. As a result entire cost has shifted upon the end-users. Newsprint prices increase sharply by 24% in a short span of three months to touch a high of $760 per tonne, an increase of $145 since December 2007.
India also, imports bulk of newsprint from foreign countries. From North America we have imported 18.9 lakh tonnes in 2004 to 26.45 lakh tonnes in 2007, a CAGR of 11.9%. Domestic consumption move up by 6.40 lakh tonnes to 9.70 lakh tonnes, a CAGR 14.9%, while import went up by 12.50 lakh tonnes to 16.75 lakh tonnes, a CAGR of 10.3%. It has been estimated that domestic demand will touch 35.54 lakh tonnes in year 2009.
In a recent development, US-East Coast prices increased; as a result the ex-mill rates, ready for shipment, risen from $608 to $710 per tonne, an increase of $ 102 in just three months, it may gallope to $770 by the end of Q3 2008.
Last year, India had purchased imported newsprint at very economical rates. It has several reasons.
i) Mass production by International Paper Manufacturer
ii) Declining demand from UK and part of the Europe forced paper products to sell at economical rates in India.
iii) China was another fear factor.
Trends have reversed in North America. They went for changing product mix, cutting excess capabilities and consolidation through buyouts. At the beginning of 2007, they supply 40.5 million tonnes, which exceeded demand of 38.3 million tonnes. At the early 2008, two million tonnes of production had fallen; as a result prices rose up. In China, old newsprint, which is one of the raw materials for paper industry, nearly double to $270 per tonne in span of just 5 to 6 months.
Rising Crude price also, affect on freight rates. Recently, crude prices breached the mark $140, as a result plup prices increase from $575 to $750 per tonne.
Despite the growing demand for paper industry, there should be new policies/projects to overcome the acute shortage of raw materials and infrastructure development. As global industry is not flourishing, with the help of implementation of setting up institutional mechanism for funding technology upgradation, relax environmental laws to encourage captive plantations for raw materials, we expect that in near future India may become market leader in paper industry.