The Hindu Business Line : Paper industry seeks tech upgradation fund

New Delhi May 28 Reeling under the increasing pressure of a lack of raw material availability and a substantial technology gap vis-à-vis competing countries such as Brazil and Chile, the domestic paper industry has demanded the creation of a Technological Upgradation Fund (TUF).

The industry is also seeking rationalisation of Customs duty on import of plant and machinery and has cautioned against reduction of duties on paper under free trade agreements (FTAs).

According to a FICCI survey, based on feedback from major paper manufacturers in the country and associations representing a large number of small and big paper mills in the country, India is a net importer of paper and paperboard.

Domestic demand

Currently, the total domestic demand for paper is 7.2 million tonnes, while production is only 6.7 million tonnes.

The gap between consumption and production has increased over a period of time.

It is estimated that this gap may widen if adequate steps are not undertaken both by the industry and the Government to spur growth, said the survey.

Imports of paper have grown at over 19 per cent annually since 2001-02.

In April-January 2006-07, imports grew 22 per cent over April-January 2005-06.

Raw material shortage

According to the survey, availability of raw material is an issue of serious concern not only for wood-based paper manufacturers but for waste paper-based manufacturers too.

The raw material available in the country is not adequate to sustain the industry's growth rate of nine plus per cent.

In the case of wood-based paper mills, the Government should permit industrial plantation on degraded forestlands.

Currently, the Government does not allow forests to be used for sourcing woods by the corporate sector, nor does it permit industrial plantation on degraded forestlands.

The Survey also said that there is a wide gap between the technologies of the domestic paper industry compared to that of the competing countries.

Most paper mills run on old technologies, which result in low productivity and high costs of production.

Therefore, apart from the demand of a TUF from the entire industry, an incentivised technology flow from Europe with the help of fiscal concessions has also been sought, specifically in case of agro residue-based paper industry.

According to the FICCI survey, the size of the industry would be around 10 million tonnes a year by 2010 from the current 6.7 million tonnes.

It is also estimated that the industry will grow at 8-9 per cent annually for the next few years.

The industry grew at 7.2 per cent during the period between 2001-02 and 2006-07.

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