India’s 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 FE’s Sandip Das on the key issues affecting the industry.
What’s 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 world’s 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. What’s 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 government’s mission of a green India. Also, the initiative has created