The Hindu Business Line : Paper mills reeling under raw material shortage

THE Indian Pulp and Paper Technical Association (IPPTA) has ruled out the possibility of any fresh investment in greenfield paper projects in the country, till the impending pulpable raw material problem is resolved.

Inadequate availability of raw material is not only posing a threat to the existing wood-based paper mills but also affecting the growth of this industry.

The reduction of import duty on paper & paperboards from 140 per cent in 1990 to the current level of 20 per cent had already put the industry under tremendous pressure.

Though the raw material problem appears serious in magnitude, the IPPTA President, Mr Pradeep Dhobale, is confident that the problem can be tackled within a few years time, provided the Union Government recasts its forest policy, allowing paper mills to have access to certain percentage of forest land for captive plantation. Similarly, State Governments should help encourage plantation on wasteland.

Paper mills, on their part, can take up social forestry schemes on the "home-stead" lands.

Mr Dhobale said that the forest based wood was in scarcity and the demand-supply gap of 10 lakh tonnes was anticipated in 2003-04, which was to be met mostly from import of pulp, although this was not a healthy sign for the country.

In fact, agro-residue such as rice straw and wheat used by small paper mills, where the black liquor is generated, caused environmental problem and therefore, these mills were often found techno-economically not viable.

The third variety of raw material, namely recycled fibre, which was of late in use, could help a lot to domestic paper mills in augmenting production because of the advancement in "deinking" technology.

At present, half of the world's total production of paper and board was from the recycled fibre as against 25 per cent the country's total production based on this kind of fibre.

Addressing here on Friday the IPPTA's annual seminar on "environmental technologies and management in pulp and paper industry", Mr Dhobale said that the demand-supply gap of paper and board was expected to be widened in the next five years. The demand might touch the level of about 10 million tonnes (mt) as against current demand of about 6 mt.

The total production at present was somehow matched the current level of demand. But unless new capacities were created, the country might be forced to meet the demand-supply gap by importing about 4 mt per annum. The quantum of import would be more in the subsequent years, he feared.

The emerging scenario was alarming for many "inefficient" mills, which might not be able to survive competition.

Mr Dhobale , who is Chief Executive of ITC Ltd's paperboards & specialty papers division, said that more than 100 paper mills were already closed in different parts of the country as they were not cost effective.

He said that developments such as "Kyoto Protocol" on environment and WTO related integration, had put further pressure on paper mills to accelerate achievement of environmental protection norms matching global standard. The paper industry associations had assured the Union ministry of environment and forest that all mills would achieve international standard of environment by 2008.

An investment to the tune of about Rs 4,000 crore might be required to buy appropriate technology to achieve such international standard, he said.

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