Why this is important to Wisconsin businesses: To encourage domestic production, 100 percent foreign direct investment is allowed under the automatic route; India currently imports paper from the U.S. and Europe as well as the UAE and Singapore.
India is among the 10 most forest-rich countries in the world. Currently, India’s forest and tree cover is estimated to be 802,088 km2, which is about 24 percent of the country’s total geographic area. Different kinds of trees ranging from deciduous and tropical hardwood trees to evergreen and coniferous trees are found here. Trees provide a variety of products such as paper, paints, chemicals, housing and furniture. India’s forest products sector can be divided into two major areas: the pulp and paper industry and the wood industry.
The Indian paper and pulp industry is poised to grow at the rate of 10 percent per year, reaching 25 million metric tons in 2019-20, up from 20 million metric tons in 2017-18. Pulp is the primary raw material used for manufacturing paper, and is obtained through processing fibers separated from wood, wastepaper, agricultural residues, etc. Wood accounts for 30 to 35 percent of production, while wastepaper and agricultural residues account for 45 to 50 percent and 20 to 22 percent respectively.
The country produces several varieties of paper, including printing and writing paper, packaging paper, coated paper and specialty paper. Varieties of printing and writing paper include cream wove paper, super printing paper, maplitho paper (non-surface and surface size), copier paper, bond paper and coating base paper, among others. Varieties of packaging paper include kraft paper, boards and poster paper, among others. Varieties of coated paper include art paper/board and chromo paper/board, among others. There are around 600 paper mills in India, of which 12 are major players. Overall demand for paper—including filter paper, teabags, medical-grade paper and tissue paper—is growing.
The government of India offers several incentives to encourage the growth of the forest products sector, including incentives for non-conventional raw material-based paper industries. In both the paper and pulp (including paper products) and the timber products industries, 100 percent foreign direct investment is allowed under the automatic route. The government has also initiated various policies to facilitate availability of raw materials. Import duties on pulp and wood have been lowered. These factors are an advantage for Wisconsin-based companies looking to venture into this area. Furthermore, there is great potential for automation and system integrators to work collaboratively with Indian pulp and paper companies and help them acquire a competitive edge.
India imports prime grades of paper are imported from the U.S., Europe, the United Arab Emirates and Singapore. These include label stock, wet strength papers, teabag tissue, soft tissue, filter paper, insulation kraft, extensible kraft, decorative laminates, overlay tissue, thermal papers, digital papers, coated papers/boards and some specialty papers.
However, India’s pulp and paper industry face several challenges, such as high costs of production due to inadequate availability and high cost of raw materials; power cost and concentration of mills in one particular area; non-availability of good-quality fiber; inefficient plant sizes; technological obsolescence; and environmental challenges. There is a need for reduction in import duty on waste paper, and duty-free imports of new and secondhand machinery.
There is rising demand for wood for railways, defense, furniture and laminate manufacturers, and the construction industry. Bamboo products, which are similar to wood, are also in demand. In addition, plywood forms a major segment of the wood-based industry in the country.
India’s government has taken several measures to increase the country’s forest and tree cover. The draft National Forest Policy 2018 that allows the wood industry’s use of degraded forest lands has largely been welcomed by wood-based industries, including paper and wood-based board manufacturers.
The Indian forest products sector caters to a wide variety of industries, aids in the production of a wide array of products like cosmetics and medicines, and represents strong investment opportunities for Wisconsin companies.