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Badal Sanyal

KOLKATA, July 14

THERE is a strong possibility that India will be heavily dependent on imported paper and paperboard within a few years time unless a national policy for industrial plantation is framed to ensure increased availability of "fibrous'' raw material at competitive prices to the domestic paper industry. This is the finding of the Indian Paper Manufacturers' Association (IPMA).

An exclusive association for large and integrated paper mills, IPMA has estimated a demand and supply gap of about 30 lakh tonnes of paper and paperboard by 2010 in the event of no major new capacity addition by domestic paper mills, mainly due to non-availability of raw material coupled with a resource crunch.

The demand for paper and paperboard is expected to be about 85 lakh tonnes by 2010 as against the current annual demand and production of about 55 lakh tonnes and 50 lakh tonnes, respectively. The demand has been estimated considering that the per capita consumption of paper will grow at least to eight kg by the same year as against the current consumption of five kg per annum.

This suggests that the country has to create an additional production capacity of 30 lakh tonnes to meet the estimated demand. And to create this additional capacity, the industry may be required to invest about Rs 24,000 crore.

Explaining in detail the emerging scenario of the domestic paper industry, Mr S.K. Bangur, President of IPMA, told Business Line that IPMA had already informed the appropriate authorities in New Delhi that the raw material problem could be solved if 10 per cent of the total 67 million hectares of degraded forestland were made available for development and afforestation.

The plantation at the degraded forestland would be made in addition to the IPMA member-mills' initiative for captive plantation and also supporting plantation under social/farm forestry programme.

Mr Bangur said wood-based paper mills at present contributed about 40 per cent of the country's total production, while contribution from recycled wastepaper and agri-residues would be 25 per cent and 35 per cent, respectively.

He said non-wood raw materials-based paper mills were constricted from growing because of dependence on imports for sourcing wastepaper, while the availability of agri-residues was linked to acreage under cultivation. Moreover, quality paper could not be produced from pulp made out of wastepaper and agri-residues. The additional capacity creation would thus largely be dependent on wood-based paper mills. Hence, there is a need for expansion of new areas under afforestation.

It is estimated that the annual raw material requirement for wood-based industries is expected to grow up to 90 lakh tonnes by the year 2010 as against the current requirement of about 58 lakh tonnes.

Describing the general perception that the paper industry was destroying the natural forest cover of the country as baseless and a myth, Mr Bangur said the fact remained that the industry consumed only three to four per cent of the total wood available in Indian forests as against 90 per cent that was used for fuel and six to seven per cent for construction, furniture-manufacture and other commercial purposes.

What the paper industry was demanding was a national policy for industrial plantation that would be framed by the Government, corporate sector, NGOs and citizens at large.

Mr Bangur was of the view that many small and medium paper mills might face severe competition from imported paper if the import duty on paper was brought down from 35 per cent to below 25 per cent.

Compared to other countries, the cost of production in domestic paper mills was high due to low installed capacity.

While the average capacity per mill in India was about 11,500 tonnes per annum, that in Malaysia was about 65,000 tonnes, in Thailand about 83,000 tonnes, in Korea about 90,000 tonnes, in Indonesia 1,35,000 tonnes, in the US 1,84,000 tonnes, in Canada 2,13,000 tonnes and in Finland about 3,15,000 tonnes.

Most domestic paper mills might find it difficult to produce quality paper at competitive costs because of low capacity.

Hence, in the larger interest of the consumer, Mr Bangur said every effort had to be made to enhance the capacity of individual mills.

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