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SHORT REPORT

ON
PAPER, PAPERBOARD & MACHINERY IN INDIA

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THE INDIAN PAPER INDUSTRY

The Indian Paper Industry accounts for about 1.6% of the world’s production of paper and
paperboard. The estimated turnover of the industry is Rs 25,000 crore (USD 5.95 billion)
approximately and its contribution to the exchequer is around Rs. 2918 crore (USD 0.69
billion). The industry provides employment to more than 0.12 million people directly and 0.34
million people indirectly. The industry was delicenced effective from July, 1997 by the
Government of India; foreign participation is permissible. Most of the paper mills are in
existence for a long time and hence present technologies fall in a wide spectrum ranging from
oldest to the most modern.

The mills use a variety of raw material viz. wood, bamboo, recycled fibre, bagasse, wheat
straw, rice husk, etc.; approximately 35% are based on chemical pulp, 44% on recycled fibre
and 21% on agro-residues. The geographical spread of the industry as well as market is mainly
responsible for regional balance of production and consumption. With added capacity of
approximately 0.8 million tons during 2007-08 the operating capacity of the industry currently
stands at 9.3 million tons. During this fiscal year, domestic production of paper and paperboard
is estimated to be 7.6 million tons. As per industry guesstimates, over all paper consumption
(including newsprint) has now touched 8.86 million tons and per capita consumption is pegged
at 8.3 kg.

Demand of paper has been hovering around 8% for some time. During the period 2002-07
while newsprint registered a growth of 13%, Writing & Printing, Containerboard, Carton board
and others registered growth of 5%, 11%, 9% and 1% respectively. So far, the growth in paper
industry has mirrored the growth in GDP and has grown on an average 6-7 per cent over the
last few years. India is the fastest growing market for paper globally and it presents an exciting
scenario; paper consumption is poised for a big leap forward in sync with the economic growth
and is estimated to touch 13.95 million tons by 2015-16. The futuristic view is that growth in
paper consumption would be in multiples of GDP and hence an increase in consumption by one
kg per capita would lead to an increase in demand of 1 million tons. As per industry estimates,
paper production is likely to grow at a CAGR of 8.4% while paper consumption will grow at a
CAGR of 9% till 2012-13. The import of pulp & paper products is likely to show a growing trend.

Foreign funds interest in the Indian paper sector is growing. IFC, the investment arm of the
World Bank is already associated with at least three of the IPMA member mills.

Customs Duty
Voce Descrizione delle voci Totale tassa
tariffaria
4802 Uncoated paper & paperboard for writing, printing or graphic use 24.421 %
in rolls/sheets [including tissue paper]
4804 Uncoated kraft paper/paperboard, in rolls and sheets 24.241 %

4810 Paper & paperboard, coated on one or both sides with kaolin, 24.241 %
inorganic subtances, w,w/o binders, surface decorated or
pronted in rolls/sheets
Fonte: Customs Tariff, 2008-09

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Import Statistics
4802 Uncoated paper and paperboard for writing, printing, or graphic
purposes, punch tape paper in rolls/sheets

In Euro Million
Rank in
Country
2008-09 2008-2009
2007-2008
(Apr-Sep 2008)
1 UK 40.9968 26.7253
2 GERMANY 40.3325 26.3384
3 ITALY 22.5716 15.8337
4 SWEDEN 23.4257 9.5849
5 FRANCE 16.5491 5.7451
6 NETHERLAND 1.7885 5.0589
7 SLOVENIA 0.9782 3.5113
8 USA 2.117 2.5623
9 INDONESIA 4.5625 2.0659
10 JAPAN 1.4235 0.8541
11 CHINA P RP 2.4893 0.7811

India's Total Import 167.3817 102.1197

4810 Paper and Paperboard, coated on one or both sides with kaolin or other
inorganic subs, with or w/o binders, surface decorated or printed in
rolls/sheets
In Euro Million
Rank in
Country 2008-2009
2008-09 2007-2008
(Apr-Sep 2008)

1 CHINA P RP 55.4581 27.8495


2 FINLAND 25.0974 13.432
3 INDONESIA 13.724 11.4318
4 SWEDEN 11.3953 6.0882
5 GERMANY 6.0882 5.4312
6 JAPAN 3.8982 4.3654
7 AUSTRIA 7.0226 3.7157
8 NETHERLAND 7.0956 3.5186
9 USA 6.9788 3.4675
11 SWITZERLAND 4.4895 2.7667
12 ITALY 3.5697 1.6352

India’s Total Import 159.3882 94.7467

TISSUE PAPER & TOILER PAPER INDUSTRY IN INDIA

Status:
ƒ Market size is estimated to be between Euro 30 – 50 million
ƒ Need driven by advent of large MNC offices, where tissues are essential in washroom
hygiene.
ƒ An ideal replacement in restaurants & commercial spaces, as water is becoming scarce.
ƒ Increase in organised retail - a main driver of the sales in the home market.

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ƒ Exposure to international habits/ greater awareness of hygiene has also created a strong
demand
ƒ Compared to the international market, per capita consumption levels in India is very low
ƒ Tissue papers in India are still considered an expense—an up market one at that.

Players:
ƒ International brands like Kimberly-Clark and Kleenex are visible in the institutional space.
ƒ Only 4 or 5 national companies like Premier, Origami, Mystique, Euro & Pilot.
ƒ [Pilot is one of the most popular with brands like Jackson, Tic Toc, & Maruti for tissues;
ƒ Snow White (under license from Walt Disney), Cellox for toilet rolls and others]
ƒ Institutional purchases form around 50 - 60% of the domestic purchases from tissue
manufacturers.
ƒ Main buyers: hospitality chains, hospitals, F&B retailers, banks/MNC offices & private labels for
retailers.

In urban India tissue paper is trying to ease out the handkerchief, creating a niche in
dispensers in washrooms and looking towards the kitchen. For e.g. Premier is now looking to
innovate for hairstyling salons while Origami is innovating for kitchen wipes and party usage.

Customs Duty
Voce tariffaria Descrizione delle voci Totale
tassa
4818 Toilet paper, handerkerchiefs, cleansing or facial 31.703 %
tissues/towels, tablecloths & serviettes, Articles of
apparel and clothing accessories
4818 40 Sanitary towels and tampons, napkins and napkin 14.712 %
..10..90 liners for babies and similar sanitary articles; Baby
and clinical diapers
4819 Cartons, Boxes, cases, bags and other packaging 31.703 %
containers of paper, paperboard, cellulose
wadding, box files, letter trays used in office/shops
4819 20 10 Cartons, Boxes, cases intended for packing match 14.712 %
sticks
Fonte: Customs Tariff, 2008-09

PAPER MAKING MACHINERY IN INDIA

Status:
ƒ India has around 600 paper mills [est.].
ƒ Number of wood based mills - around 20 and balance 580 mills – based on non-
conventional raw materials.
ƒ Most paper mills in India have technologies that fall in a wide spectrum: from oldest to the
most modern.
ƒ Foreign funds evincing interest in the Indian paper sector as it is growing.
ƒ IFC, the investment arm of the World Bank is already associated with at least 3 IPMA
member mills.

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Challenges facing Indian mills: Opportunities for Italian companies:
ƒ Industry in need of state-of-art technologies to reduce its production cost
ƒ Up gradation of machinery to meet the international standards & enhance capacity
ƒ Indian mills are weak in instrumentation & process control which result in variations output
ƒ Technical know-how will be required in providing solutions in:
1. : Bleaching process / Chemical Recovery
2. : Reduction in freshwater consumption
3. : Adoption of modern pulping digesters
4. : Cost effective technology for utilization of agro residues, etc.
5. : Recovery of Fibre consumption [waste paper conversion/recovery]
6. : Improve energy efficiency

Customs Duty
Voce tariffaria Descrizione delle voci Totale tassa

8419 32 00 Dryers for wood, paper, pulp, paper or paperboard 28.639 %

8439 Macchinari for making pulp, finishing paper or paperboard 28.639 %

8441 Macchinari for making paper, pulp or paperboard - cutting 28.639 %


machines, making bags, sacks, envelopes; cartons, boxes,
cases, other containers,
Fonte: Customs Tariff, 2008-09

Import Statistics for Machinery


8439 – Machinery for Making Pulp of fibrous cellulosic material or for
Making or Finishing Paper or Paperboard
In Euro Million
Rank in
Country 2008-2009
2008-09 2007-2008
(Apr-Sep 2008)
1 ITALY 11.5194 9.8623
2 CHINA P RP 8.1395 6.6795
3 GERMANY 16.8776 5.3217
4 FINLAND 15.1548 4.4311
5 SWEDEN 29.6161 4.234
6 SPAIN 1.022 3.0733
7 SWITZERLAND 1.0366 2.19
8 NETHERLAND 0.0876 1.1169
9 USA 4.4019 0.9855
10 AUSTRIA 1.7739 0.8614
11 FRANCE 8.3877 0.8249
14 UK 3.1244 0.4088
21 BELGIUM 0.1679 0.0949

India’s Total Import 111.4053 42.6977