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Paper Industry!

Let's understand the Indian paper industry with few key points which we can keep at the back of our minds..Do share your thoughts!


(1) The Indian paper industry accounts for about 4% of the world's production of paper. Globally over 400 million tonnes of paper and paper products are consumed.
(2) The Indian paper industry is expected to grow at about 3.5-4.5% CAGR through 2025 to touch 22 million tonnes.
(3) The world's three largest paper producing countries are China, the United States, and Japan (these three countries account for approximately half of the world's total paper production), while India accounts for a small but growing share of the global market.
(4) India is the fastest growing market for paper globally The futuristic view is that growth in paper consumption would be in multiples of GDP and hence an increase in consumption by one kg per capita would lead to an increase in demand of 1 million tonnes.
(5) In spite of the sustained growth witnessed by the industry, the per capita paper consumption in India stands at 13-14 kg which is well below the global average of 57 kg and significantly below the 200 kg in developed economies.
(6) China is expected to add 8-9 million tonnes of capacity during 2020 to 2025, while India's capacity addition is expected to be in the range of 0.5-1.5 million tonnes. Also, capacity addition in the EU is expected to remain at 4-6 million tonnes during the next 5 years.
(7) Domestic Demand for Paper is expected to continue growing at a robust pace with Packaging Paper & Board and Specialty segments registering the fastest growth rates.
(8) In the calendar year 2020, demand for paper and board (writing and printing or W&P, paperboard and newsprint) is expected to be subdued on account of the Covid-19 pandemic-led disruptions across the globe.
(9) The US and the EU, which together account for almost 40% of global demand, are also expected to witness demand contraction due to the pandemic-driven lockdown.
(10) The estimated turnover of the industry is INR 70,000 crore (domestic market size of INR 80,000 crores) and its contribution to the exchequer is around INR 5,000 crore.
(11) The industry provides direct employment to 5,00,000 persons, and indirectly to around 1.5 million.
(12) The Paper mills use a variety of raw material viz. wood, bamboo, recycle fibre, bagasse, wheat straw and agro residues. In terms of share in total production, approximately 25% are based on wood, 58% on recycled fibre and 17% on agro-residues.
(13) Raw material costs account for around 47% of the operating income of mills in the paper industry.
(14) Agro and Wood based pulp are the main raw materials required for manufacturing W & P paper, especially in the higher end papers such as maplitho and coated paper.
(15) India's wood resources are limited; therefore, cost of wood is much higher in global comparison. Since there is conspicuous absence of Government's policies favoring industrial/production plantation, securing future wood supplies will be the Industry's biggest challenge
(16) The paper industry is classified into four segments, Printing & Writing (P&W), Packaging Paper & Board, Specialty Papers & Others, and Newsprint.
(17) The different raw materials used to produce paper are - agri-residues, wood and bamboo pulp, as well as imported pulp.
(18) Domestic Paper Market Share:
Printing and Writing (P&W) paper segment: 30%

Packaging Paper & Board segment: 51% and is the largest segment in the industry.

Specialty paper & others: 4% and is the smallest segment in the industry.

Newsprint segment: 15%.
(19) Indian paper mills are categorized based on raw materials used by them in the manufacture of paper - wood/forest based mills, agro-based mills and wastepaper based mills.
(20) Wood accounts for 30-35%, wastepaper account for 45-50% and agri-residues at 20-22%.
(21) Over the last few years, imported pulp has accounted for around 10-11 per cent of domestic production. With domestic wood supply being inadequate for this growing need, the mills will have to import wood in larger quantities.
(22) With Free Trade Agreements, imports are expected to continue challenging the domestic industry.
(23) The alternative source of raw material is wastepaper/recycled paper - domestic and imported. Both together accounted for nearly 40 % of the total paper production.
(24) The third alternative source of raw material for the paper industry is agri-residues such as bagasse, wheat straw, wild grass and other such agricultural wastes. Bagasse is the most widely-used agri-residue in the paper industry.
(25) However, availability of bagasse has been declining due to its increased use in power generation by sugar industry.
(26) The paper industry is labour intensive, power intensive as well as capital intensive and is exposed to several risks.
(27) Risks to the industry- changes in the government policies, environment policies, duties and taxes, technological obsolescence and external economic factors.
(28) The paper industry consumes a large amount of energy and water. Energy costs account for 16-18% of costs.
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