The rising import cost of wood pulp has hit the R35,000-crore paper industry, which is trying to put in place a system for collaborating with forest departments of various states for taking up plantation on such lands.
The raw material challenge faced by the paper industry in India, if not addressed, could affect its growth, Yogesh Agarwal, managing director & CEO, Ballarpur International Graphic Papers Holdings, and president, Indian Paper Manufacturers Association (IPMA) told FE. Agarwal said that under the proposed system, the ownership of land would remain with the forest department even as the company puts in money to grow raising eucalyptus trees, which are used for making paper.
At present, the paper industry gets its key raw material wood pulp through social forestry projects with local communities. An estimated 5.2 lakh hectares of land is under social forestry projects, which supply wood pulp to key manufacturers, such as ITC, Orient, Ballarpur Industries and Star Paper.
Acknowledging the need for ensuring raw material supply to the industry, a Planning Commission working group under the chairmanship of secretary, Department of Industrial Policy and Promotion (DIPP), has proposed suitable policies for facilitating captive growth of trees under the 12th Five-Year Plan. It has also said that 2.5 million hectares, out of the total 28.84 million hectares of degraded forest land, may be harnessed for this purpose.
Paper consumption in India has been growing at about 8% in the last few years. Volume-wise, the annual consumption is more than 10 million tonne and it is expected to reach 20 million tonne by 2020.
IPMA has also said that the Indian paper market has become vulnerable to imports as developed economies, the traditional importers, face renewed signs of economic recession. As a result, Indonesia and China enjoy huge incentives. While the USA and the EU have taken measures in the form of punitive import duties to face the onslaught of unbridled exports by these countries, India has, unfortunately, chosen not to safeguard its domestic industry, Agarwal noted.
From 7.5 kg during 2007-08, India's per capita consumption of paper has gone up to 9.3 kg during the current fiscal. The global average is around 45 kg while it is as high as 312 kg for the US.