economics of paper and pulp industry in world and indian context

1. ECONOMIC
S OF
SAISIKAN PATRA
PGS18FOR7919

2. What is a paper industry?
The pulp and paper industry comprises companies that use wood,
agro-residue and any fibrous material which is suitable for making
paper and paper based products as raw material and produce pulp,
paper, board and other cellulose-based products.

3. India's Paper industry, as one of the old and core industrial
manufacturing sector with a bearing on socio-economic development
has undergone a significant change during the last three decades,
especially after liberalization.
This traditional Indian paper sector had leverage and played a pivotal
role in laying the foundation for economic growth.
The paper industry in India could be classified into three categories
according to the raw material consumed.
1. Wood based
2. Waste paper based
3. Agro based
The Indian paper industry produces just 2.6% of the total world
production of paperboard and newsprint.
At present, India lags far behind compared to international standards.
The Scandinavian countries, USA, Russia, China, Indonesia and Japan
are the major players in the field of pulp and paper.

4. Global paper industry: Production
The pulp and paper industry is a large and growing portion of the world's economy
World production of paper and paperboard is around 390 million tonnes and is
expected to reach 490 million tones by 2020.
The pulp and paper industry is faced with mounting environmental, political, and
economic pressures to reduce the volume and toxicity of its industrial wastewater.
These prospects have encouraged the emergence of new and innovative zero liquid
discharge or closed-cycle systems which, when implemented in a mill, will enable the
recovery of clean process water from the effluent and recycle it back into the mill.
A medium rating is based on:
European paper and pulp buyer squeezed by
input cost vs. USD end product prices.
There has been an big impact of increasing
price of the power sector
 Currency rate fluctuation is also a big
concern ( USD vs. Euro )
 Paper recycling in the industry ( as a whole )
is in light of the global energy transition

7. Under the impact of a booming Internet and new media, the product
structure of the paper industry will confront the pressure of profound
adjustment.
The widespread adoption of new media and paperless reading has led
to a shrinking demand for printing & writing paper as well as
newsprint.
Whilst demand for printing, writing paper and newsprint is decreasing
globally, the internet and e-commerce business model has driven the
rapid expansion of the express delivery business, and the demand for
packaging paper is expected to increase steadily. The successful paper
companies will adjust their product focus in light of the changing
demands of the e-commerce world.

8. INDIAN PAPER INDUSTRY
In India the paper consumption is predominantly domestic and the
demand is driven by GDP growth. The main growth drivers for paper
demand includes enhancement in government spending on education
(6% of GDP)
The printing and packaging industry is growing at 14% CAGR.
In India, there are 759 Pulp & Paper mills with an installed capacity of
12.7 million tons producing around 10.11 million tons/annum of
paper/paper board and newsprint out of an annual consumption of
around 11.15 million tons.
The Indian paper industry accounted for less than 3% of global paper
demand. The per capita consumption of paper amounts to around 10
kilogram (Kg), which is significantly lower than world average of
around 58 Kg and even the consumption levels of some of the other
developing nations.

9. ( Growth of Paper Industry in India )
Above figure shows that the Indian paper industry recorded a unique
growth in production with 0.11 million tons in 1950-51 to 10.1
million tons in 2010-11. It is 2.6% of the total world production of
394 million tons/annum of paper, paper board and newsprint.

10. ( Raw Material Consumption Pattern )

11. Export & Import of Paper, Paper Board & Newsprint (Million Tons) Paper particulars
2006-07 2007-08 2008-09 2009-10 2010-11
Paper/Paper Board Exports 0.339 0.325 0.334 0.369 0.518
News Print 0.004 0.004 0.006 0.013 0.009
Total Export 0.343 0.329 0.34 0.382 0.527
Paper/Paper Board Imports 0.348 0.451 0.437 0.614 0.632
News Print 0.79 0.89 0.97 0.85 0.95
Total Import 1.138 1.341 1.407 1.464 1.582

12. PROSPECTS OF PAPER INDUSTRY- CONSUMPTION & PRODUCTION
The forecast for consumption of paper has been derived considering two alternate
scenarios.
In scenario 1, trend in growth of consumption in the past has been used as basis to
determine the growth trend in the 12th Five year plan (2012-17) and the forecast for the
next 15 years has been made.
In scenario 2, consumption forecast has been made based on the following assumptions:
a) For writing paper, elasticity of consumption has been taken at 0.9. Taking the GDP
growth at 9% during 2012-17 and beyond, the growth of demand for writing paper
has been assumed at 8.1% per annum.
b) For packaging paper, the tracking variable is the likely manufacturing growth. They
have assumed a growth of 10% for the growth of the packaging paper.
c) For the newsprint, the average annual growth in first two years is taken at 7%. In
subsequent years, the growth has been taken assuming an elasticity of consumption
at 0.9, or a growth of 8.1% per annum.
Based on the above assumptions, the expected pattern of paper consumption emerges as
shown in table :

13. Projected Consumption of Paper (Million Tons)
Projected Production of Paper (Million Tons)

14. SWOT Analysis to Indian Paper Industry
STRENGHTS WEAKNESSES
Increased Demand
Production of wide variety of Paper
High Employability
Recyclability of Waste Paper
 Low Capacity Utilization
 More water requirement
 Highly pollute
 Decrements in forest lands
 Highly Capital Intensive
 Industrial sickness
OPPORTUNTIES THREATS
 Huge growth potential
 Lead to socio economic development
 Output recyclability
 Huge product demand
 Innovative new product creations
 Emergence of ancillary industries ie.
Packaging
 Increased Raw Material Costs
 Competition
 Changing Governmental Policies
 Technological obsolescence
 Degradation of Environment
 Entry of substitutes like e-paper, plastic
and other products

15. Conclusion
The paper industry worldwide will be more resourceful and energy
efficient, producing a more diversified product range.
The paper industry will also increase its focus on serving niche
markets.
High added-value and environmental sustainability will be the key
mantras for the industry.
The cardboard, paper and packaging products will have good demand
worldwide.
The paper industry is one of the key industrial sectors contributing to
the Indian economy
Strategy to be adopted by the paper industry, to meet its ever-growing
demand of wood on continuous and sustainable basis is to enlarge
social and farm forestry plantation apart from raising plantations by
forest development corporations.
Proper attention raised to be paid by the R&D wings of various paper
mills to identifying or discovering alternative sources of raw materials
for replace wood which has become a scare product.