Paper industry to grow 100% in 10 yrs: IPMA chief

With the economy on a solid growth path and the share of services sector in GDP rising every year, the Indian paper industry holds a huge potential for growth.

With the economy on a solid growth path and the share of services sector in GDP rising every year, the Indian paper industry holds a huge potential for growth. At present per capita consumption of paper in India is low at 7.2 kg as compared to 42 kg in China and 350 kg in developed countries, however, the industry is poised to grow 100 per cent over the next 10 years, says Pradeep Dhobale, newly elected president of the Indian Paper Manufacturers Association (IPMA).

“The Indian paper industry is poised to grow from 7.2 million tones in 2005-06 to 13.95 million tonnes in 2015-16. The IPMA Member Mills alone will be investing Rs 12,000 crore to Rs 15,000 crore over the next ten years,” Dhobale said.

The total acreage under cultivation of pulpable variety of trees by the industry has already gone up from 25,432 hectares in 2001-02 to 58,281 hectares in 2005-06 with a larger impact on rural development and employment.

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India’s domestic paper market is estimated to be about Rs 20,000 crore. The demand is experiencing a growth of 7-8 per cent aided significantly through enhanced domestic supply.

Growth is clearly demand led and it is likely that eventually demand may outstrip production. As per IPMA estimates, Writing & Printing Paper, Industrial Grade Paper and Speciality Paper account for 33 per cent, 47 per cent and 4 per cent of total paper demand and these segments are growing at about 7 per cent, 8 per cent and 5 per cent respectively.

However, a major handicap that the industry faces is inadequate availability of quality raw material at a competitive cost. The cost of wood (accounting for 32 per cent of the total cost of production) to Indian players is $50 per metric tonne as compared to around $30 internationally.

The Chinese government has approved a national plan of building a complete industrial chain between their farm forestry project and the paper manufacturing industry by 2010. Their national programme includes planting five million hectares of fast growing trees in the Southeastern coastal areas. However, the Indian industry is batting hard to face the challenge from China, “We are pleading with the government for at least 2 per cent access to degraded forestland on lease in the radius of 150 to 200 km to mills to produce pulpable wood to achieve cost competitiveness in terms of wood and freight and also, help generate employment, create wealth for the rural poor besides, lend protection to the environment”, Dhobale said.

WHAT INDUSTRY WANTS

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• Implementation of Multi Stakeholders Partnership (MSP) model proposed by MoEF to enable industry to create a robust raw material resource.

• Create a Technology Upgradation Fund (TUF) primarily to access critical technology.

• Rationalisation of Excise Duty at 8 per cent across all varieties of Paper & Paperboard.

• Retention of peak Customs Duty on imports at the current level of 12.5% to maintain parity in global production costs.