The Indian paper industry is an important industrial sector having a bearing on the socio-economic development of the country. The first mechanized paper machine was set up in 1830.
The Indian paper industry presents a unique picture, with a mix of large and small paper mills, having capacities that range from five to 600 tonnes/day, with an average size of 11,500 tonnes/yr. There are more than 600 pulp and paper mills producing nearly 6.2 million tonnes/yr of paper and board against an installed capacity of about 8.6 million tonnes. The industry has a turnover of more than $35 million employing nearly 300,000 people directly and another one million indirectly.
The per capita consumption is only around 5.5 kg/yr, which is low as compared to 29 kg in China and the world average of 52 kg/yr. Paper and board production is forecast to reach 6 million tonnes in 2005 with a projected growth of nearly 6%.
Sectoral performance
The paper industry in India can be broadly divided into three major segments:
- Forest-based raw material: The large integrated paper mills are included in this segment. They use hoarwood/bamboo as the major fibrous raw material and are equipped with complete chemical recovery and effluent treatment systems.
- Agro-based raw materials: This segment covers the medium and small paper mills that use straw, bagasse and other annual grasses as their raw material. Very few mills are equipped with chemical recovery systems.
- Recycled waste paper: This segment covers the medium and small paper mills that use waste paper as a major raw material.
There are 33 mills using forest-based raw materials, with an installed capacity of 2.8 million tonnes. Since eight of these mills are currently closed, the operating capacity of these mills is approximately 2.4 million tonnes producing nearly 1.85 million tonnes/yr of paper and board. This sector has performed well in the last year with an operating rate of more than 80%.
With regards to the agro-based and waste paper segments, they produced nearly 3.6 million tonnes of paper and board against an operating capacity of nearly 5 million tonnes, or an operating rate of about 70%.
Fiber resources
The total land mass of the Indian peninsula adds up to 328.8 million ha. Forests and woodlands occupy 20% of the landmass out of which 38.6 million ha is dense forest with a crown density of more than 40%. The rest of the area, about 31 million ha, is considered as degraded forestland.
Plantations account for 50% of the forest area; most of them consist of hardwood species. However, only small portions of the plantations are used as a source for pulpwood. The major competing use for native and plantation grown trees is the use of wood as a fuel in the rural parts of the country.
Under the existing forest policy, the paper industry cannot use wood from any of the national forest reserves. This leaves the paper industry with little choice for sourcing of wood-based raw materials. More and more mills are using recycled fiber to make paper. In the 1970s, 84% of the mills were using a wood-based raw material. However, with the stringent regulations on the felling of trees, the industry took to the use of non wood-based raw materials. Currently, nearly 30% of raw material is coming from annually renewable materials and about 35% is secondary fiber. It is estimated that by 2010, the use of secondary fiber will rise by about 5%, Fig. 1.
As more mills are set to move from using agro residues to secondary fiber, there is a potential for import. Also, India is a ready market for technology related with to the production of paper using recycled fibers.
Nevertheless, there is a gap between the supply of the raw material and its demand. The mills in the organized sector have taken many steps to ensure their future supply of raw material. Ballarpur Industries Ltd. has undertaken a massive program for plantations in partnership with the farmers in the area close to the mills. In the future it is planned that the raw material for a given unit shall be sourced from within a radius of 350 km. Likewise, Hindustan Paper Corporation has partnered with tea plantations around its factories, which will grow and supply bamboo to its mills in the north east.
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| Agro residue | Availability
(million tonnes) |
| Wheat straw | 22 |
| Rice straw | 15 |
| Bagasse | 10 |
| Jute, Mesta, Kenaf | 2 |
| Total | 49 |
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Agro-based raw materials are widely used in the Indian paper industry. There is sufficient quantity of agricultural residues available, Table 1. To date, these materials are also being used by other sectors, reducing their availability to pulp and paper mills. Wheat straw has traditionally been used as cattle feed as well as for construction of hut roofs in rural India. The competition for bagasse comes from sugar mills, which use it as a fuel for cogeneration. The use of jute, kenaf and mesta is limited because of location disadvantages and technological problems associated with making pulp from these materials.
The use of wastepaper accounts for about 33% of Indian paper capacity. Most paper is recovered, but, due to alternative uses, the availability of the recovered paper to the paper industry is less than 20%, which is rather low when compared with countries such as Thailand (42%), China (33%) and Germany (71%). Waste paper recovery and trading are still unorganized in India. Individual businesses do the collection and the sorting system is unsophisticated. The rate of recovery has not kept pace with secondary fiber use, thus resulting in an increase in imports. The multiple use of paper products (as wrapping papers, packaging applications, etc.) is common in India, and often these end users pay a better price for wastepaper than the paper industry.
Quantitatively, the recovery of waste paper in India had seen a 30% increase between 1995 and 2000 when the figure stood at 850,000 tonnes. However, by 2003 this figure fell to 450,000 tonnes. The main grades of secondary fiber available for recycling are old corrugated containers, office refuse, old newspapers/magazine waste and mixed waste paper, Figure 2.
Growth trends
The Indian paper industry has seen turbulent times since the economy was opened and paper imported under the open general license (OGL) scheme of the government. Domestic demand for paper and board has been rising in the past three years at a rate of around 5.5%/yr, and is now touching the 6% mark. Of the total demand, printing and writing grades and industrial paper account for about 95% and the other papers, including tissue the remaining 5%. Tissue accounts for 1.3% of the total paper consumption in India.
As Figure 3 shows, the market is again buoyant and imports are again on the rise. Local producers, taking advantage of financial markets offering capital at very competitive interest rates, have begun to invest in new capacity, Table 2.
With the increasing literacy rate of the population and with the upsurge in the use of computers, there is bound to be a sustained demand increase in the future. Recently, the government imposed a 2% duty on the total amount of the value of all imported goods. These funds have been hypothecated for use in the education sector, particularly for primary education in rural India. This one factor will go a long way in generating demand for printing and writing papers.
Thanks to the growth of the Indian printing industry there is a ready market for domestically produced paper that can substitute for imported paper for high quality printing jobs.
Another factor that goes in favor of the Indian paper industry is the relatively low cost of labor.
Issues and challenges
The major issues confronting the pulp and paper sector in India are:
- Availability of good quality fiber
- Economies of scale
- Obsolescent technology
- Environmental concerns.
Under its GATT/WTO committments, India has agreed to liberalize tariffs for many items, including 144 pulp and paper products. Depending on the level at which tariffs are allowed to be set, India may find itself faced with a considerable increase in imported higher-quality paper.
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| | Mill | Capacity expansion
(tonnes/yr) |
| 1 | Ballarpur Industries Ltd. | 200,000 (Bhigwan unit)
40,000 ( Sewa unit)
10,000 (Kamalpuram unit) |
| 2 | J. K. Paper | 300,000 in the next three years
50,000 (coated paper plant) |
| 3 | Tamil Nadu Newsprint and Papers Ltd. | 100,000 |
| 4 | Hindustan Paper Corporation,
Unit Hindustan Newsprint Ltd. | 100,000 |
| 5 | Hindustan Paper Corporation,
Units Cachar Paper Mills, Ltd.
and Nowgaon Paper Mills Ltd. | 60,000 for both mills combined |
| 6 | Sirpur Paper Mills, Ltd. | 54,000 |
| 7 | Khanna Paper Mills | 50,000 |
| 8 | West Coast Paper Mills Ltd. | 100,000 |
| 9 | Rama Newsprints and Papers Ltd. | 100,000 |
| 10 | Andhra Pradesh Paper Mills Ltd. | 45,000 |
| 11 | ITC | 75,000 (Coimbatore Unit) |
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Coping with global competitiveness
With India becoming a member of WTO, it has become important for the industry to develop a strategy to become globally competitive. During the phase of industrialization after independence, the immediate focus of the industry was essentially on growth and expansion. In a regulated market under a mixed economy, it had developed a feeling of complacence. For a long time, it often compromised quality, perhaps due to monopolistic conditions in a closed market scenario. Indeed, for several decades, a major part of the Indian industry never really came to attach significance to terms such as market forces, economy of scale, quality and customer satisfaction.
But in the wake of the economic liberalization, triggered by the new economic policy of the government in 1991, the Indian paper industry found itself confronted with international competition. Almost overnight, the industry was exposed to the difficult task of integrating into the global economy. This also had an evolutionary effect on the traditional Indian management style, triggering a serious redesign of strategies to ensure survival. Today, the concept of globalization, eco-cycle compatibility and other environmental issues are being integrated at the planning level by the major domestic players.
Among the three segments of the Indian paper industry, the forest-based pulp and paper industry is slowly moving towards competitiveness through adequate modernization. However, a significant proportion of this segment has yet to undertake modernization programs. Areas identified for technological improvement in these mills include the installation of oxygen delignification for low kappa pulp and improved online control of stock preparation and paper machines.
In the agro-residue-based segment, there are very few mills complying with quality and environmental requirements. Furthermore, the majority of units do not have the proper technology to produce good quality products at a competitive price. This segment is also having serious environmental problems due to the lack of chemical recovery systems.
Major portions of this segment require modernization to become competitive. Upgrading pulp washing systems to reduce the organic carryover to the bleach plant, extracting the maximum amount of chemicals (addition of extra rotary drum washer) and building a common chemical recovery plant for a cluster of mills have been identified as the main technological initiatives needed.
The third segment, recycled fiber, also has a number of small pulp and paper mills that are based on obsolete technology. One of the major concerns of these mills is a lack of adequate equipment for processing recycled fiber. As a consequence, the quality of paper products produced from these mills does not conform to international standards. The competitiveness of this segment without modernization would be poor. Among the areas identified for improvement in this sector are upgrades of secondary fiber processing systems and the installation of a common effluent treatment plant for a cluster of mills.
With a vibrant, growth-oriented economy, the demand for paper is expected to continue increasing, which in turn is expected to foster growth in the Indian paper industry. Pressure for technological improvements is also closely tied to demands for greater environmental responsibility in the country. The industry has to comply with the Charter on Corporate Responsibility for Environmental Protection (CREP) wherein the emission limits have already been fixed for the future.
Environmental concerns
The Indian industry recognizes that it is a polluter. The paper industry releases chlorinated organic compounds, dioxins and furans. Wastewaters are know to carry high levels of BOD, COD and suspended solids.
On the atmospheric side, the industry faces the daunting task of tackling the emission of non-condensable gases. The problem of solid waste disposal is also a major concern to the industry in the face of local environmental pressures.
The industry, having realized the importance of being a clean corporate citizen, developed the CREP charter in consultation with the Central Pollution Control Board. The major players took the lead and decided to restrict and reduce emission levels. The CREP charter for the large pulp and paper mills, which account for nearly a third of production, emphasizes the reduction of AOX emissions to 1.5 kg/tonne of paper within two years of March 2003. These large mills will have to install lime kilns by 2007. By the same year, all mills that use sulfur in the cooking process must have an odor control system. Reductions in quantity of fresh water used have also been tabled.
These environmental requirements should keep the equipment vendors busy. The AOX emissions target presents opportunities for the introduction of ECF and TCF bleaching processes. In addition, at least 12 new lime kilns need to come onstream in the next few years. To date, however, only a handful of the large mills have them.
Moreover, all mills will have to at least partially close the water loop to reduce water consumption. As per CREP requirements, the level of water consumption has to be reduced to 140 m³/tonne. Present consumption is as high as 250 m³/tonne.
One of the biggest business opportunities that exists in the large Indian mills is the installation of odor control systems. In 2007, the absence of such a system shall be treated as non-compliance of the CREP limits.
The CREP requirements for the small and medium size paper mills are somewhat different as these mills do not use sulfur in the cooking process. However, these facilities shall either have to install a chemical recovery plant by 2006 or use wastepaper as the fiber source. If a mill decides to install a chemical recovery unit, it will need to increase its production since such a plant is not viable at lower output levels. If, on the other hand, the mill opts to use wastepaper, quality considerations will guide it to choose a state-of-the-art deinking plant and/or use imported waste paper. These mills will also have to upgrade their effluent treatment plants to meet the prescribed discharge norms.
It needs to be noted that the discharge limits have been agreed upon and committed for compliance by a maturing Indian pulp and paper industry. In this respect, many companies have already initiated action and major players such as BILT, APPM, TNPL, HPC are well beyond the planning stages in the implementation of the CREP requirements.
Conclusion
The paper market in India is resurgent, growth indicators are on the rise. Investment is necessary and ongoing to improve both the quality of paper produced and environmental issues. The conditions are right for a new greenfield pulp and paper project in the country. Such an investment could be just around the corner.
R.K. Jain, K. Singh and A.G. Kulkarni are with the Central Pulp and Paper Research Institute (CPPRI) of India.
