DPIIT admits oversupply in kraft paper and a wood shortage; packaging paper consumption rises 8.2% in FY 2023–24

DPIIT admits oversupply in kraft paper and a wood shortage; packaging paper consumption rises 8.2% in FY 2023–24

Department for Promotion of Industry & Internal Trade (DPIIT)’s Annual report on Indian Paper Industry for FY 23-24
-Availability of wood domestically is 9 million TPA against the demand which is 11 million TPA
-During the year 2023- 24 the import of major grades of paper, paperboard and newsprint (HS Code 4802, 4803, 4804, 4805, 4808 and 4810) was around 1929.1 thousand tonnes
-The current market of country’s packaging paper and paper board being around 15 million tonnes.
The Pulp and Paper Times

The Indian Paper Industry accounts for about 5% of the world production of paper, paperboard and newsprint making it 5th largest producer in the world, with an estimated production around 24 million tonnes per annum.

According to The Department for Promotion of Industry and Internal Trade (DPIIT)’s annual report for FY 23-24, as per estimate there are around 850-900 pulp and paper mills in India of which around 550 pulp and paper mills are reported to be in operation. The mills in operation use wide spectrum of raw materials such as wood, recycled fiber, bagasse, wheat straw, market pulp etc. Accordingly based on the raw materials, the paper industry can be categorized into wood based, agro- residues based and waste paper or recycled fiber-based mills. However, most of the wood and agro based paper mills use mixed furnish as well as waste paper/imported pulp.

“In general, the total production share of wood, agro and waste paper-based mills is estimated to be around 18 -20%, 6 – 8 % and 74- 76 % respectively. The Indian Paper Industry accounts for about 5% of the world production of paper, paperboard and newsprint making it 5th largest producer in the world, with an estimated production around 24 million tonnes per annum. In India the per capita consumption of paper is estimated to be about 16 kg which is much lower than the world average of 57 kg. This provides significant potential for growth of paper sector to reach world average per capita consumption,” the report said

Paper Industry Prospects

The Indian Paper industry is also linked with various allied industries and activities including agro-forestry, chemical, machinery & equipment, converters, printers, paper traders (waste paper as well as finished paper), transporters, shipping, etc. The paper value chain covers almost all spheres of the commerce and trading communities thus providing direct / indirect employment opportunities to a significant percentage of population in the country. With recent ban on Single use Plastics (SUP), Indian Paper Industry is increasingly focusing on environmentally friendly, sustainable and cost-effective packaging solutions for paper- b a s e d packaging. In 2023- 24, the domestic consumption of packaging paper has reported to grew @ 8.2% with current market of country’s packaging paper and paper board being around 15 million tonnes. The reported projections of packaging sector indicate a growth @ CAGR of 19.48 % of during next five years.

Domestic Market Demand:

It is interesting to note except in India, a decline in consumption of paper has been witnessed globally. The demand of paper and paper board in the domestic market has remained intact by and large. Kraft paper segment continued to be significantly impacted during 2023-24 due to excess production and lower domestic & export demands. In recent times, the paper prices have gone through a lot of corrections due to low global demands, as well as volatile geo political situation specially in context of Russia - Ukraine / Israel – Hamas war leading to supply chain disruptions and thus impacting severely the Indian Paper Industry in terms of raw material availability, high cost of inputs as well as exports.

Import & Exports Scenario:

Exports of paper and paperboard from India have surged, with a nearly 80% increase in value in 2021-22, reaching a record INR 1396.3 billion. This growth is driven by higher demand for coated paper, uncoated writing and printing paper, tissue paper, and kraft paper. The major paper grades exported during 2023–24 include uncoated bleached & unbleached paper and paper board as well as coated paper and paper board.

During the year 2023- 24 the import of major grades of paper, paperboard and newsprint (HS Code 4802, 4803, 4804, 4805, 4808 and 4810) was around 1929.1 thousand tonnes (valued at INR 13248 Crores) which translates into Y-o-Y growth % of 34.29% in terms of volume & 5.72% in terms of value in INR. Import of Newsprint (HS Code 4801) in 2023-24 stood at 65% of total consumption (i.e. around 664 thousand tonnes in terms of volume valued approximately at INR 3521 Crores).

As per available estimate there has been around 93 % increase in import of paper & paper board in terms of volume basis & 38 % in terms of value basis between 2022- 23 & 2023 -24 from ASEAN countries on Year over Year growth basis. Further when compared to 2013 – 14 the cumulative annual growth rate in import from ASEAN countries over last 10 years is around 20% in terms of volume and 22% in terms of value basis. paperboard in these countries.

Major Challenges:

The major challenges before the Indian Paper Industry are – 1. Consolidation of the fragmented industry 2. Achieving economies of scale 3. Modernization of mills, productivity improvement and building new capacities 4. Development of a robust and sustainable raw material base (Availability of wood domestically is 9 million TPA against the demand which is 11 million TPA) 5. Quality benchmarking. 6. Improving Global Competitiveness 7. Low recovery of waste paper which is average 40- 45% only 8. Growing cost of raw material 9. Environment standards and regulatory 10. Increasing Imports from overseas.

Policy Interventions:

Government of India has implemented several policy interventions to promote the paper sector in India. Here are some key measures:

a)Green Chemistry Initiatives: The Office of the Principal Scientific Adviser (PSA) to the Government of India has been focusing on green chemistry for sustainable chemical industry in India. The pulp and paper industry is one of the sectors identified for developing a strategy and roadmap for R&D interventions
b) National Environmental Policy and Pollution Control Norms: The Ministry of Environment, Forest and 2 Climate Change (MoEFCC) has established environmental standards and discharge norms for the pulp and paper industry. The Charter for Corporate Responsibility for Environment Protection (CREP) was launched in 2003 to encourage industries to adopt environment friendly practices.
c) National Manufacturing Policy (NMP): The NMP aims to enhance the share of manufacturing in the GDP and create additional jobs of the Government of India. It includes the promotion of clusters and aggregation through the creation of National Investment and Manufacturing Zones (NIMZs) of the Government of India.
d)Single Window Clearance: The government has initiated the process of simplification and rationalization of statelevel business regulations and developed a single-window clearance system to facilitate ease of doing business of the Government of India.

Proposed Expansions & Upgradation:

As per reports in trade magazines / information from various sources, a few paper mills in recent times have gone or planning for modernization / rebuilding / establishing of new paper projects to improve productivity and built new capacities such as:

Ruchira Papers Ltd increased its kraft paper production capacity from 52800 TPA to 118800 TPA. • N.R. Agarwal Industries has set up a new 900 TPD paper board plant • Genus Paper and Boards Ltd – Unit 2 increased its manufacturing facility of Kraft paper and Duplex board by 825 TPD • Orient Paper Mills is modernizing and expanding production capacity to 400 TPD. • TNPL & Andhra Paper Ltd are in process of installation of tissue paper machine • Kuantum Papers is in process of upgrading all its paper machines to increase production capacity to 600 TPD • Emami Paper Mills has successfully retrofitted the largest newsprint machine in the Indian paper industry, making it suitable for producing other grades of paper. They have also upgraded their 15MW power plant to 18MW.
 

Web Title: DPIIT admits oversupply in kraft paper and a wood shortage; packaging paper consumption rises 8.2% in FY 2023–24