India's paper consumption set to double by 2020

Written by Sandip Das | Updated: Aug 2 2013, 03:26am hrs
Indias paper consumption has grown at a steady rate of 8% in the last five years. The industry, with an annual turnover of R40,000 crore and consisting largely of integrated mills, has been scaling up operations to meet the rising demand for paper. Yogesh Agarwal, president of Indian Paper Manufacturers Association, which has BILT, JK, ITC, Orient and Star as members, spoke to FEs Sandip Das on the key issues affecting the industry.

Whats driving paper consumption at a time when the world is moving towards using IT-enabled services

Paper consumption is linked to the economic development of a country. India has 17% of the worlds population, but it consumes just 3% of paper globally. The per capita consumption of paper in India is still abysmally low, at around 10 kg, which is well below the global average of 55 kg. With growth in GDP and increase in literacy, paper consumption in India is bound to go up. In fact, consumption in India is set to double by 2020, from the current level of 12 million tonne.

What are the challenges faced by the paper sector in India

While macroeconomic challenges prevail across sectors, the paper industry is faced with certain unique challenges, key among them being the scarcity and high prices of wood. In the absence of a captive plantation policy in the country, as is followed in the US, Latin America, Scandinavian countries, Australia, Japan, China and Indonesia, paper mills are dependent upon small and scattered plantations under social farm forestry for pulpwood. A fragmented market, the non-availability of credit insurance and delays in GST rollout are some other challenges.

The consumption of paper is often discouraged due to its impact on the environment. Whats your view on the issue

Unfortunately, the myth that the paper industry denudes forest cover continues to malign its image. The fact is, in India, the paper industry is primarily social-farm forestry-based, with close linkages to the farming community. Over the last decade, industry-led farm-social forestry has brought around 0.5 million hectare under pulp wood plantation, which was mainly degraded marginal land of farmers. At present, the industry sources 80% of its requirement of wood through farm forestry. In fact, today the paper industry is wood positive as it grows more plantations than it consumes.

By promoting agro-forestry with farmers, IPMA member mills are helping the governments mission of a green India. Also, the initiative has created major employment opportunities in remote, rural areas.

How do you see paper consumption growing in India and what will be its impact on the industry

Globally, there is a shift from the west to east, in terms of both production and consumption of paper. Emerging economies are seeing the highest growth in the sector as developed economies are staring at saturation or subdued growth.

India is one of the fastest-growing paper markets in the world. We believe the consumption of paper in India will double by 2020, which roughly means addition of 1 million tonne of paper in consumption annually. The market in India is highly fragmented and manufacturers need to optimise the scale and cost of servicing the market.

How has the government supported the industry

A working group was formed by the Planning Commission under the chairmanship of secretary, Department of Industrial Policy and Promotion, for the 12th Five-Year Plan. The report of the working group has reinforced the fact that there is pressing need for augmenting raw material availability for the industry. It has also noted that the agro-forestry initiative of the industry has contributed significantly towards increasing the green cover and benefitted farmers.

Keeping the projected industry growth in mind, in case of wood, the working group has proposed that suitable strategic interventions and policies have to be implemented to facilitate captive plantations and that 2.5 million hectare out of the total 28.84 million hectare of degraded forest land may be harnessed for this purpose.