State of Paper industry in India 2021
Industries in India and all around the world were hit hard by the pandemic. After almost a year, between December 2020 and January 2021, the Indian small-scale and medium-scale industries experienced little growth. Several industries such as paper also moved along the higher growth rate on the graph. But from the last few months, i.e from mid-February 2021, the paper industry is again on a roll and is taking a descending fall.
Only when the paper industry started to cover the losses infused by the pandemic, it was hit hard again. This time due to a shortage of raw materials, Kraft paper in the market. The new laws implemented by the Chinese ministry of environment is one of the major reasons leading to the downfall of the paper industry in India. Late back in January 2018, china announced to block RCP(recovered paper) imports from the USA. USA was the highest RCP supplier to China, accounting for a total of 45% of RCP supply. Right after announcing the blocking of the RCP import from the USA, china implemented new import laws. On December 23, 2019, the Chinese environmental ministry released 12 new batches of RCP import permits. According to fast markets risi, the permit covers a total of 11 million tonnes of import. And most of the imports are given to large mills, producing recycled packaging paper and board.
After the new ban and permit laws, the Chinese paper industry is highly dependent on imports. With almost a 90% ban on paper recycling and manufacturing, most of the paper mills are highly reliant on imports. According to the Chinese Paper Association, Chinese pulp producers survived the entire 2020 on an edge, forcing many producers to shut down their mills.
The government of India, gave a green flag to allow a huge import of RCP and paper board to china. After the new import laws in china, India has been increasingly exporting paper waste and recycled paper to China. This situation has led to an extreme scarcity of paper board and RCP. This shortage is forcing the manufacturers and traders and people involved in the paper industry, to increase the rates for their customers. Customers not knowing the back theory of price rise, are not complying with the increasing rates. This has created a huge dent in the entire paper industry.
Owners of major paper mills and people involved in the paper industry raised an alarm in the last few months, alerting the Indian government about the factors that could leave irreparable damage in the Indian paper industry. Many paper and paper packaging associations from all over India wrote letters to the ministries seeking government intervention that could provide them relief. But the government is yet to take any action on this. Paper manufacturers association (IPMA) in their letter to the union ministry of commerce and industry, pointed out that countries like and china and other Asian countries have cheap access to the raw materials from India. Their countries also provide them with incentive and subsidies for their business. India providing them with zero or preferable import duties, make the Indian manufacturers incur losses in the domestic market. The association also suggested allowing imports only on the basis of an actual usual license.
Several Indian ministers have also raised worries surrounding the fall of the paper industry. According to the business standard, the standing committee of commerce tabled a report regarding this in the Rajya sabha. The committee in their report emphasised the economic disturbance in the Indian GDP and especially in industrial manufacturing due to Chinese imports. The business standard also stated there is a tremendous increase in India’s export to china between the year 2017-2018. During the year, 2007-08, India’s export to China was $2.5 billion, whereas, in 2017-18, it was $50 billion!
On a positive note, some stakeholders are predicting that the paper industry might return to normal by the last quarter of this year.
State of Paper Industry in India 2021
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Reference :
https://www.thehindubusinessline.com/markets/commodities/how-the-paper-industry-has-been-affected-by-the-3-c-factors/article34131826.ece
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