Indian Paper Industry

June 29, 2010Pulp and Paper Industryby EconomyWatch


The Indian Paper Industry is a booming industry and is expected to grow in the years to come. The usage of paper cannot be ignored and this awareness is bound to bring about changes in the paper industry for the better. It is a well known fact that the use of plastic is being objected to these days. The reason being, there are few plastics which do not possess the property of being degradable, as such, use of plastic is being discouraged. Excessive use of non degradable plastics upsets the ecological equilibrium.

What keeps the Indian Paper industry rolling?

In order to keep the Indian Paper industry rolling, the foremost thing which must be kept in mind is the availability of the raw materials. Every possible effort is to be made to take India at par with the other paper industries of the world. Application of paper is varied and one cannot think of a life without paper. The raw materials need to be of good quality. There should be enough modernized techniques to carry out production. Reducing costs should be accompanied by low cost of production. Policies should be implemented to bring about optimum production.

Softwood producing wood fibers make up the main raw material in the manufacturing process worldwide. China and India are excluded from this category. The reason being wood products availability is meager. Instead, straw, bagasse which are obtained as residues from the agriculture industry are used for the production of paper. Indian paper industry uses used paper for the manufacturing of paper after recycling. It has been estimated that around 40% of paper used is recycled.

Role of forests in the Indian paper Industry:

Wood timber forms the major raw material in the Indian paper industry. Therefore, forests determine the extent to which the Indian paper industry can flourish.

Introduction On Paper Industry

The new millennium is going to be the millennium of the knowledge. So demand for paper would go on increasing in times to come. In view of paper industry's strategic role for the society and also for the overall industrial growth it is necessary that the paper industry performs well.

Government has completely delicensed the paper industry with effect from17th July, 1997. The entrepreneurs are now required to file an Industrial Entrepreneur Memorandum with the Secretariat for Industrial Assistance for setting up a new paper mill or substantial expansion of the existing mill in permissible locations.

The Paper industry is a priority sector for foreign collaboration and foreign equity participation upto 100% receives automatic approval by Reserve Bank of India. Several fiscal incentives have also been provided to the paper industry, particularly to those mills which are based on non-conventional raw material.

Capacity, Production, Raw material and Import

There are, at present, about 515 units engaged in the manufacture of paper and paperboards and newsprint in India. The country is almost self-sufficient in manufacture of most varieties of paper and paperboards. Import, however, is confined only to certain specialty papers. To meet part of its raw material needs the industry has to rely on imported wood pulp and waste paper. Production of paper & paperboard during the year 2002-03(upto December, 2002) is 24.52 lakhs tonnes. At present about 60.8 per cent of the total production is based on non-wood raw material and 39.2 per cent based on wood.

Performance of the industry has been constrained due to high cost of production caused by inadequate availability and high cost of raw materials, power cost and concentration of mills in one particular area.

Several policy measures have been initiated in recent years to remove the bottlenecks of availability of raw materials and infrastructure development. To bridge the gap of short supply of raw materials, duty on pulp and waste paper and wood logs/chips have been reduced. The capacity utilization of the industry is low at 60%. About 194 paper mills, particularly small mills, are sick and /or lying closed. Several policy measures have been initiated in recent years.

Imports of paper and paper products was growing over the years. However, it has increased during 2001-02 after a fall in 2000-01. About 1,40,000 tonnes of paper was exported in 2000-01 mainly to the neighbouring countries.

India's per capita consumption of paper is around 4.00 kg, which is one of the lowest in the world. With the expected increase in literacy rate and growth of the economy, an increase in the per capita consumption of paper is expected.

The demand for upstream market of paper products, like, tissue paper, tea bags, filter paper, light weight online coated paper, medical grade coated paper, etc., is growing up. These developments are expected to give fillip to the industry.

Indian paper industry needs the following for being globally more competitive.

  1. Sustained availability of good quality of raw materials (forest based) and bulk import of waste paper to supplement the availability of raw materials.
  2. Adequate modernization of the manufacturing assests.
  3. Improvement of the infrastructure.
  4. Quality improvements and reduction in cost of production
  5. Import policy conducive for import of material, equipment, instruments, raw materials & technologies which are bearing of the quality and environment.

Based on the recommendations made in the Report and in consultant with the industry Associations, action plans are being finalized in consultation with other Ministries/Departments concerned. The Main Action Points proposed are as under:


Improvements of key ports, roads and railways and communication facilities which will help the entire industrial sector including pulp & paper.

Raw Material

(i) For Wood Based industry
Revision of forest policy so that plantation can be raised by industry/Cooperatives of farmers/State Government. Degraded forest land to be made available to the industry for raising plantations.

(ii) For Waste Paper based Industry
Import of waste paper at minimum import duty. Introduction of ecolabeling system where in products made from recycled fibre are rated higher than the products made form virgin fibre. Introduction of modern and effective collection and grading system.

(iii) For Agro Based Industry
Funds to be made available for technology upgradation for handling & processing of agro residue fibre, in small & medium scale industries.

Government Policies

Accelerated depreciation to partially mitigate high capital intensity. Allow duty free imports of new & second hand machinery/equipment for Technology Up gradation.

Energy Policy

Better availability & quality of coal. More uniform Energy Policy by States.

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