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14th November, 2011

FOREWORD

Paper Industry is one of the high priority industries having a bearing on

the socio-economic development of the country. In India this industry plays avital role in the overall industrial growth and also provides a necessary mediumto propel our knowledge based economy forward in the new millennium.

The Planning Commission has therefore taken up an exercise to prepare awell defined path for the development of the paper industry in the context of theoverall objective of inclusive national growth. A Working group on Pulp andPaper sector was accordingly constituted for the task of reviewing the progressmade by the industry in the previous plan period (2007-2012) and for suggestingsuitable interventions to accelerate the growth of the sector doing the 12th Plan

(2012-17).

The deliberations of the Group have shown that the expected increase indemand for paper in the country will require considerable increase in theindigenous production base of the paper sector in the next fifteen years. Clearly,this would require in-depth planning to address critical issues such as non-availability of fibrous resource, trained manpower, high input costs, technologicalobsolescence and lack of economies of scale. In order to examine these issuesin detail specific Sub-Groups were formed under the aegis of the Working Groupto come out with recommendations in the areas of Raw Materials, Recycled /Waste Paper, Technology, Energy & Environment and Human ResourceDevelopment.

This report is a consolidation of the inputs received from the Sub-Groups.

I would like to place on record my appreciation for the efforts put in bythe chairpersons and members of the different Sub-Groups in the preparation ofthis report. I believe the report would help the policy makers significantly inframing the guidelines for the growth of the paper sector during the 12 th fiveyear plan.

(P.K. CHAUDHERY)

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PARTICIPANTS IN THE MEETING OF WORKING GROUP ON PULP & PAPER SECTOR

FOR 12TH FIVE YEAR PLAN CHAIRED BY SH. R P SINGH, IAS, SECRETARY, DIPP,

MINISTRY OF COMMERCE & INDUSTRY, GOVT. OF INDIA, NEW DELHI

S.No. Name Designation & Organization

1. Shri R.P. Singh,IAS,

Secretary, Industrial Policy and Promotion,

Ministry of Commerce & Industry- Chairman

2. Shri M.C Singhi, Senior Economic Advisor,Industrial Policy and

Promotion, Ministry of Commerce & Industry

3. Shri Talleen Kumar,

IAS

J oint Secretary, Industrial Policy and Promotion,

Ministry of Commerce & Industry

4. Shri U.K. Kalra Economic Advisor, Industrial Policy and

Promotion


5. Shri D. Banerjee J oint Advisor, Planning Commission

6. Shri S.S. Das Additional Economic Advisor, Industrial Policy

and Promotion, Ministry of Commerce & Industry

7. Shri P. Biswas, Director, Industrial Policy and Promotion


8. Dr. R M Mathur Director, Central Pulp & Paper Research

Institute,

9. Shri PradeepDhoble

Director, ITC Ltd.,

10. Shri MVN Rao CMD, Hindustan Paper Corporation Ltd.

11. Brig. S.K. Mutereja CMD, NEPA Ltd.,

12. Shri Anil Kumar CEO & ED, Shreyans Industries Ltd;

13. Shri O.P. Goyal Director, J .K.Papers Ltd.

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14. Shri YogeshAgarwal

Ballarpur Industries Ltd.

15. Shri S.K. Singh Ministry of Heavy Industries

16. Shri R.C. Rastogi CMD, Khatema Fibers Ltd, & President Indian

Recycled Paper Makers Association

17. Shri R. Vijay Kumar Secretary General, Indian Newsprint

Manufacturers Assocation

18. Shri P.G.Mukundan,

Secretary General, Indian Agro and Recycled

Paper Mills Association

19. Ms. Nisha Goel Assistant Director, FICCI

20. Ms. P.L. Ahujarai Director, Ministry of Environment & Forests

21. Shri DharmendraPrakash

J oint Development Commissioner, Ministry of

Small & Medium Enterprises

22. Prof. A.K. Ray Indian Institute of Technology, Roorkee

23. Dr. Sanjay Naithani Indian Council of Forestery Research, Dehradun

24. Dr. R K J ain Central Pulp & Paper Research Institute

25. Mrs. Rita Tandon Central Pulp & Paper Research Institute

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Participants in the meetings of various sub-committees of theworking group for pulp & paper sector for 12th Five year plan

Sub- committee on Raw Material (Group-I) for wood based paperindustry


1. Shri R. K. Goel, IFS IG, Forests, Ministry of Environment & Forest,Government of India Chairman

2. Shri A. M. Singh, IFS DIG Forests , Ministry of Environment & Forest,Govt of India

3. Shri H.C.Chaudhary AIG, National Forest Policy, Ministry ofEnvironment & Forest, Government of India

4. Shri Harish Chaudhary, AIG, Forest Conservation, Ministry ofEnvironment & Forest, Government of India

5. Shri R C Mall, Executive Adviser Emami Papers Ltd., Kolkata

6. Shri Sajjan Bhajanka President Federation of Indian Plywood & PanelIndustries & MD, Century Plyboard (I) Ltd.

7. Shri Anil Kumar CEO & ED, Shreyans Industries Ltd.

8. Dr. R. M. Mathur Director, Central Pulp & Paper Research Institute

9. Sh. Piare Lal Secretary General, Agro Forestry FarmersAssociation, Phagwara, (Punjab)

10 Dr. H. D. Kulkarni, Vice President ( Plantation ), ITC Limited

11. Shri. J K J ain Chief Forest Officer, International Paper

12. Dr. R. K. J ain Scientist, Central Pulp & Paper ResearchInstitute

13. Dr. Vimlesh Bist Scientist, Central Pulp & Paper ResearchInstitute

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Sub- committee on Raw Material (Group-II) for Agro based paperindustry


1. Sh. R C Mall Executive Adviser, Emami Papers Ltd. Chairman

2. Sh. Anil Kumar ED&CEO, Shreyans Industries Ltd.

3. Dr. R M Mathur Director, Central Pulp & Paper ResearchInstitute,

4. Sh. Pawan Agarwal MD, Naini Tissues Ltd., & President, KumaonGarhwal Chamber of Commerce & Industries,

(UK)5. Dr. H D Kulkarni Vice President (Plantation), ITC Ltd.

6. Sh. N Narayanamoorthy Secretary General, Indian Paper MakersAssociation

7. Dr. Vimlesh Bisht Scientist, Central Pulp & Paper ResearchInstitute

8. Dr. R K J ain Scientist, Central Pulp & Paper ResearchInstitute

Sub- commit tee on Waste Paper based paper industryS.No. Name Designation & Organization

1 Sh. R C Rastogi President, Indian Recycled Paper MillsAssociation & CMD, Khatema Fibres Ltd.

2 Sh. P G Mukundan Secretary General, Indian Agro and RecycledPaper Makers Association

3. Sh. B V S. J oga Rao ITC. Ltd.4. Sh. Vijay Kumar Secretary, Indian Newsprint Manufacturers

Association

5. Dr. R M Mathur Director, Central Pulp & Paper Research Institute

6 Smt. Rita Tandon Scientist, Central Pulp & Paper ResearchInstitute

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Sub- committee on Energy, Environment & Technology


1. Shri R.R.Vaderah Managing Director, BILT Ltd Chairman

2. Shri Pradeep Dhobale Director, ITC Ltd

3. ShriK.S.Kasiviswanathan

Managing Director, SPB Ltd

4. Shri Madhukar Mishra Managing Director, Star Paper Mills Ltd

5. Shri Arun G Bijur Managing Director , SPB PC Ltd

6. Shri Anil Kumar CEO & ED Shreyans Industries Ltd

7. Dr. Suresh Panwar Scientist, Central Pulp & Paper Research

Institute

8. Dr.B.P.Thapliyal Scientist, Central Pulp & Paper Research

Institute

Sub- committee on Human Resource Development


1 Sh. Madhukar Mishra President (IPMA) & MD, Star Paper Mill

Chairman

2 Sh. O. P. Goyal Wholetime Director, J K Papers Limited

3 Sh. Anil Kumar Vice-President (IARPMA) & CEO & ED,Shreyans Industries Ltd

4 Brig. S. K. Mutreja CMD, Nepa Papers Ltd.

5 Dr. Vimlesh Bisht Scientist, Central Pulp & Paper Research

Institute6 Dr. R K J ain Scientist, Central Pulp & Paper Research

Institute

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CONTENTS

ListofTables...................................................................................................................

List

of

Figures.................................................................................................................

ListofAbbreviations.......................................................................................................

i

ii

iii

Chapter1 CurrentStatus&FutureOutlookoftheIndianpaperindustry

1.1Introduction........................................................................................................1.2StatusofIndianPaperIndustryvisvisGlobalmajorpaperproducingcountries1.3ProtersFiveForcesanalysisofIndianPaperIndustry........................................1.4StructureofIndianPaperIndustry......................................................................

1.4.1 RawMaterialConsumptionPattern1.4.2 VarietywiseproductionfromdifferentsegmentsofIndianPaperIndustry

1.5ProspectsofPaperIndustryConsumption&Production....1.6ScenarioofExport/Importofpaper/paperboardandnewsprint.......................

Chapter2 StatusofRawMaterialsusedbyIndianpaperindustry

2.1Woodbasedmills.................................................................................................2.2Agrobasedmills...................................................................................................

2.2.1 Presentstatusofbagasseproductioninthecountryanditsavailability

to

paper

industry

2.2.2 Presentstatusofwheatstrawproductioninthecountryanditsavailabilitytopaperindustry..

2.3WastePaperbasedmills......................................................................................2.3.1 Currentstatusofwastepaperutilization2.3.2 FutureOutlook..................................................................................

Chapter3 Strategiesforachievingtheenvisagedgrowth:Constraints

andThewayforward

3.1Majorconstraints.................................................................................................3.2Strategiesrequiredtoachieveenvisagedgrowth................................................

Chapter4 Technology&Innovation

4.1Technologyinterventiontoachievetheprojectedgrowthrate...........................4.2TechnologyinterventiontoaddresstheenvironmentalIssues............................4.3Strengtheningofcapabilitiesforindigenousmachinerymanufacturingfacilities4.4StrengtheningofR&Dsupport............................................................................

1

3

5

7

7

8

9

12

14

14

15

15

16

17

17

20

22

25

25

28

28

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Chapter5 HumanResourceDevelopment

5.1Currentstatusonavailabilityofprocessstreamtechnicalmanpowerforpulp&

paperindustry......................................................................................................

5.2Quantumoftechnicalmanpowerexistingintheindustry..................................5.3Requirementoftechnicalmanpowerinfuturebytheindustry..........................

5.3.1 Skilledmanpowerrequirementinpulp&papersectorfor12thplanonlongtermbasis

5.4Existinginstitutionsimpartingvariouscoursesintheareaofpulp&paperinthecountry.....................................................................................................................

5.5Gapbetweenrequirement&availabilityofprocessstreamtechnicalmanpower..5.6Milestonestobeachieved...................................................................................5.7DetailsofbudgetforHRD....................................................................................

5.7.1 StrengtheningofITIsforstartingcertificatecourse.........................5.7.2 Upgradationoffacilitiesofhigherlevelinstitutions.........................5.7.3 StrengtheningofCPPRIintheareaofHRD&training......................

Chapter6 Fiscal&Tradepolicyrelatedissues

6.1CustomsDuty.....................................................................................................6.2AssistancetoForestry/Plantation6.3CENVAT/GST6.4CreationofTechnologyUpgradationFund(TUF)6.5DirectTaxes.6.6ImportPolicy..

Chapter7 FlowofResources&Budgetaryrequirements

A.)FlowofResourcesfor12thFiveyearplan..7.1Financesforimprovingtherawmaterialbase&quality...................................

7.1.1 Wood......................................................................................7.1.2 Agroresidues...................................................................................

7.2Modernization&expansionofexistingmills.....................................................7.2.1 Woodbasedmills.............................................................................7.2.2 Agrobasedmills...............................................................................7.2.3 Recycled/wastepaperbasedmills...................................................

B.)Budgetaryrequirementforthe12thFiveyearplan...........................................Chapter8 Recommendationsof theWorkingGroupon Pulp&Paper

Industry

Chapter

9

Printing

Industry

29

29

29

30

31

32

33

33

33

34

34

35

36

36

36

37

38

39

39

39

39

40

4040

41

43

45

51

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Annexures

AnnexureI MinutesoftheFirstmeetingofWorkingGrouponPulp&Paper

Industryheldon30.05.2011..............................................................

AnnexureII

Terms

of

Reference

of

Sub

Committees

on

Raw

material.................

AnnexureIII TermsofReferenceofSubCommitteesonWastePaper.................

AnnexureIV TermsofReferenceofSubCommitteesonTechnology,Energy&

Environment..........................................................................................

AnnexureV TermsofReferenceofSubCommitteesonHumanResource

Development.........................................................................................

AnnexureVIBusinessModelsforraisingplantation...

AnnexureVIIListofTechnologicalinterventions.

AnnexureVIIIMinutesofMeetingofWorkingGrouponPaperheldon29.08.11

AnnexureIX MinutesofMeetingheldon28.09..11.

iv

xiv

xvi

xvii

xix

xx

xiv

xxvii

xxxiii

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CHAPTER 1

CURRENT STATUS AND

FUTURE OUTLOOK

OF THE

INDIAN PAPER INDUSTRY

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1 |

CHAPTER 1

1.1 Introduction

The use of paper by a society is often taken as a yardstick of its development.

The need for documentation of knowledge and record keeping has long been

perceived to be linked to the intellectual prowess of a nation. The tradition of use

of bhoj patra or the bark of the Bhoj Tree for documentation of our

scriptures is acknowledged the world over. Such recording pre-dates most of the

earliest known documentation on paper like substances. As time progressed, the

need for cheaper means of documentation of records was felt by civilizations. It

was here that the Chinese made their first attempt to manufacture paper from

plant resources. Historians believe that it was the Moghals, who introduced thetraditional paper makers - the kagzis- in the country as they expanded their

empire in India.

It was in 1832 that the first modern paper mill was set up in Sreerampur, West

Bengal, using the mechanized process for paper making developed in the

western world. Thus the journey of machine made paper in India has seen over

a century and a half pass by.

Unlike the West, however, India had very little soft wood for the manufacture of

paper. Since machines were designed to process soft wood, there was a

problem in using them for harder indigenous raw materials. In the year 1914, a

process was developed to use bamboo for paper making. This provided the

required impetus to the paper making operations in the country. Figure 1 shows

some of the major events that shaped the fortunes of the paper industry in its

journey from a single unit in 1832, to the present day scenario.

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55 Mills - capacity 7.68 lac tons

Oversupply leading to plant closures.

Use of bamboo- rapid growth in the

Industry.

world-wide recession eases

17 mills- capacity 1.37 lac ton

First mill on imported wood

137 mills -capacity 18.16 lac ton

Excise duty rationalized at 16%Production- 42 Lacs tpa

Demand grows to 36 lacs

325 mills. Demand supply situationimproves installed capacity 33.04 lac

1951

1971

1914

1832

1983

2001

1991

2000

1981

1993

2003

2Custom duty 25%

Growth4.8 %

Production10.1 1millionTonne

Fig.1

Road Map of Indian Paper Industry

Source: CPPRI

After independence the country faced a major challenge of marshalling all theavailable resources to lay down the foundations of an industrialized India.

Consequently, most manufacturing was placed under government control

through an elaborately administered license regimen. Under this regimen the

paper industry grew rather slowly over the next three decades. However, the

paper "famine" of 1970 changed the working environment of the paper sector,

and a number of licenses were given to smaller units for manufacture of paper.

These units used agricultural residues and waste paper as the raw material

base, and eased the paper scarcity in the country. However, this also created a

fractured structure in the industry, where small, medium as well as large mills

came in to co-existence.

India began its program of economic reform in 1991. One by one, the industrial

sectors were freed from an administered license regimen. In J uly, 1991, the

government decided to delicense the paper industry. This acted as an incentive

for the growth of the industry (Fig. 2). Today, there are 759 Pulp & Paper mills

with an installed capacity of 12.7 million tons producing around 10.11 million

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3 |

tons/annum of paper/paper board and newsprint out of an annual consumption

of around 11.15 million tons.

Fig.2

Growth of Indian Paper Industry

Source: CMIE/ Industry/CPPRI

The steady growth rate shown in the figure above tell a satisfying growth story

for the Indian paper industry.

1.2 Status of Indian Paper Industry vis--vis Global Major Paper

Producing Countries

The Indian paper industry produces 10.11 million tons paper per annum, just

2.6% of the total world production of 394 million tons/annum of paper, paper

board and newsprint. As compared to international capacities, we lag far behind.

Scandinavian countries, USA, the Russian Federation, China, Indonesia and

J apan are the major players in the field of pulp and paper. These countries have

some of the best available raw materials for paper production, cutting edgetechnologies and control the global trade. Only few mills in India employ the

State of Art technologies. Table 1 shows variety wise production of paper by

different categories of mills in India, the status of technologies employed by

these mills and their comparison with the major Global paper producing

countries.

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Table. 1

Variety-wise produc tion of paper/paperboard & technolog ies used by Worlds

leading manufacturers and status of Indian mills.

Varieties ofPaper

World India

WorldProduction,milliontons/ year(2010)

WorldsLeadingmanufactu- rers

Cutting EdgeTechnologiesUsed

IndiasProduction,milliontons/year(2010)

No. ofMills

No. of MillsUsingAdvancedTechnology

Status oftechnology inIndian mills

Printing+Writing/Coated/UncoatedWood freePaper

110 USAGermanyBrazilIndonesia

TurkeyChinaItaly

J apanFinland

Proficientdebarking andchippingsystems

Low kappapulping,EfficientWashing,screening &centricleaning

ECF & TCF

Bleaching Efficient

chemicalrecovery

Modern highspeed papermachines

3.90 146(19woodbasedmills,49 agrobased& 83RCFbasedmills)

5 woodbased millsand 3 agrobased mills.

Low kappapulping, ECFbleaching,Efficientwashing,screening ,cleaning andchemicalrecoverysystems in 5wood based

mills. Drum pulpers

and efficientdeinkingsystems in 3RCF basedmills.

Only 3 millshave papermachinesabove 1000m/min speed.

Packaging/Wrapping/other

Papers

222 USATurkeyChina

GermanyItalyAustraliaSwedenFinland

Low kappapulping

Efficient

Washing andchemicalrecovery

Modern highspeed papermachines

5.41 444(3wood

basedmills,101agrobasedmills,340RCFbasedmills)

3 woodbased mills,6 RCF

based mills

Low kappapulping, efficientwashing,

screening,cleaning andchemicalrecoverysystems in 3wood basedmills.

Drum pulpersand pulpscreening andcleaningsystems in 6RCF basedmills.

Newsprint 34 CanadaChina

J apanUSAGermany

High yieldpulping

EfficientWashing

Modern highspeed papermachines withsuper-calenders

0.79 112(2

woodbased,110RCFbased)

2 woodbased mills,

10 RCFbased mills

CTMP andCSRMP pulping

in 2 woodbased mills.

Hi consistencypulpers anddeinkingsystems in 6RCF basedmills.

4 High speedmachines withcalenders.

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CHAPTER 2

STATUS OF RAW MATERIALS

USED BY

INDIAN PAPER INDUSTRY

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CHAPTER 2

2.1 Wood Based Mills

The present consumption of wood as raw material for paper making is 9 million

tons per annum. About 75% of the wood demand is being met throughfarm/social forestry sources. Future demand will be additional 12 million tons of

wood to meet the projected production targets by the year 2025*.

The average growing stock of recorded forest area is very low at 62 m3 per ha

with poor mean annual increment in the range of 1 m3 per ha. per year. Poor

increments, extremely low sustainable yields and increasing demand have led to

growing shortage of timber and fuel-wood in the country. Fuel-wood needs have

been somehow met partly from agricultural residues and largely through

unrecorded and unsustainable removals from the forests as well as agro / farm &

social forestry plantations. Modernization, growth and expansion of wood basedindustries including pulp and paper have suffered for want of sustained supplies

of industrial round wood at reasonable price.

Considering a yield of 50 tons/ hectares of wood and a felling cycle of 5 years

(including 30% extra for fuel/fodder/local usages) land etc, approx 2.5 million

hectares of land needs to be covered under pulp wood plantations. This will be

approximately 9% of the degraded forest land of about 28.84 million hectares.

2.2 Agro Based Mills

As per estimates, nearly 4.2 million tons of paper will be produced from agro

based raw materials in the country by 2025*. Bagasse and wheat straw are the

two major agro based raw materials used by the paper industry. Both these raw

materials, though available in plenty, are not available to the paper industry due

to diversion for other end-uses. Various end-uses of the agro based raw

materials in India are given below

Bagasse:About 18% of bagasse is available as net surplus from the sugar

mills provided they do not have any cogeneration facility or distillery or other

downstream products to feed. The other end uses of bagasse are mushroomproduction, biomass based power plants, paper, furfural and composting etc.

Wheat Straw: Major portion goes as fodder & a small quantity for paper

making. Unrecovered straw is burnt

________________* Assuming baseline scenario 1 of forecast of consumption of paper

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Source: PPI, Industry & CPPRI

The per capita consumption of India stands at only 9.3 kg as against 42 kg in

China, 22 kg in Indonesia, 25 kg in Malaysia and 312 kg in the US. However, this

is expected to change in the years to come as the Indian populace adopts an

increasingly westernized life style. Studies have shown that the growth of paper

consumption changes from linear to exponential trends once the GDP growth

rate crosses the double digit mark. Analysts often draw comparisons between

the growth seen in bottled drinking water and tissue paper segment. Even if one

assumes an average 9% GDP growth rate in the medium term, linear

extrapolation suggests that by 2025, the country will consume over 24 million

tons of paper.

At the current rate of production, the annual turnover of the Indian paper industry

is nearly Rs. 30,000 Crore with a resultant contribution of around Rs. 3,000

Crore to the national exchequer. The industry employs 0.37 million people

directly and 1.37 million indirectly. Paper mills are spread fairly evenly

throughout India, as the location of mills in India is governed by a multitude offactors such as the availability of fibrous raw material, water, coal, local market

and the enabling fiscal policies of various states. The major players of the

industry are located in Andhra Pradesh, Tamil Nadu, Maharashtra, Punjab,

Madhya Pradesh, and Gujarat. In terms of numbers, Gujarat tops the tally with

130 units, followed by U.P (115), Maharashtra (112) and Tamil Nadu (88).

1.3 Porter's Five Forces analysis of Indian Paper Industry

Michael Porters model identifies the most powerful driving forces within industries

and the interactions between them to determine the competitive position and profitpotential. The five driving forces are;

Threat of new entrants Bargaining power of suppliers Bargaining power of buyers Threat of substitute products or services Rivalry among existing competitors

Household& SanitaryPaper

28 USAChina

J apanItaly

Turkey

Low kappapulping

EfficientWashing,screening &cleaning

Modern stockpreparation and

additivesystems.

Modern tissuepaper machines

0.10 7(2woodbasedand 5RCFbasedmills)

2 woodbased mill

2 modern papermachines inwood basedmills

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Porters five forces indicating the competitive intensity and attractiveness of the

market for the Indian Paper Industry are shown in Fig. 3.

The analyses of these forces indicate that industry is operating under various

positive and negative forces which have a mixed effect on its competitiveness.

Competition among the mills is low due to large number of grades beingmanufactured. High switching cost among the products also makes the industry

rivalry less intense, however the difficulties to exit from the business due to high

capital cost increases the chances of the rivalry among the producers of similar

grades. The threat from new entrants is low on account of high capital cost, low

return on investment and scarcity of raw materials for paper making.

Bargaining power of suppliers of raw materials i.e. wood, straws, bagasse, waste

paper, energy (coal etc.) and modern technology is high which is a deterrent for

growth of the industry. A positive factor for growth & competition among the industry

is the forecasted increase in consumption of paper with growing per capita income,

literacy rate and living standards. However increase in imports of duty free newsprintand diversified customer requirement are the negative factors for the industry. Apart

from these, Industry is also facing tough competition from electronic media, wide

spread use of internet, computerization, ebooks and imported printed books.

The industry is thus operating under various constraints and high risks, as mentioned

above. Therefore it requires support from Government, in terms of policy

interventions for its sustenance.

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Fig. 3

Porters five forces analysis of Indian Paper Industry

1.4 Structure of Indian Paper Industry

The Indian paper industry has highly fragmented structure consisting of small,medium and large sized paper mills having capacities ranging from 10 to 1150

tons per day. The industry employs wood, agro residues and recycled/waste

paper as the major raw material for manufacturing different varieties of paper,

paper board and newsprint.

1.4.1 Raw material consumption pattern

The industry is typically divided into three major sectors based on the raw

materials used. The raw material consumption pattern has changed over the last

few decades. In early seventies the share of wood based raw material was 84%

whereas the agro based and waste paper based contributed only 7% & 9%

respectively. Subsequently, due to scarce availability of wood based raw

material, the share of recycled waste paper and agro based raw material has

increased remarkably. Presently the share in production of paper from wood

based raw materials, agro residues and recycled/waste paper, is 31%, 22%

and 47% respectively as shown in Fig. 4.

RivalryNo.ofgradeshavingdistinctuses(+)

Highswitchingcost(+)Exitbarrier(-)

BarriertoEntrantsHighcapitalcost(+)

Low

ROI

(+)

Rawmaterialscarcity(+)Trainedmanpower(+)

SuppliersRawmaterials(-)(wood/ bagasse,straws/wastepaper)

Trainedmanpower(-)Coal/Gas(-)Importedtechnology (+)

BuyersGovt.PurchaseforRTE(+)Growingpercapitaincome(+)

Dutyfreenewsprint(+)Customerchoice(-)

Substitutesemail/computerisation(-)e-books/e-newspapers(-)Importofprintedbooks(-)Electronicmedia -

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Fig. 4

Structure of Indian Paper Industry

Source: Industry/CPPRI

1.4.2 Variety wise production from different segments of Indian

Paper Industry

Indian paper industry produced 10.11 million tons of paper, paper board and

newsprint during 2010-11 as detailed below

Wood based. There are 30 large integrated paper mills based on

wood/bamboo as major raw materials. These mills contribute about 31% of

the total production which works out to about 3.1 million tons/annum.

(Nearly 2.2 tons of wood (Oven Dry (O.D.) basis) is needed to produce 1 ton

of paper.)

Agro based.There are 150 paper mills based on agro residues in the country

using bagasse & straws as major raw materials in proportion of 50% bagasse

and 50% wheat/rice straw and other annual grasses & contribute to about

22% of the total production which is 2.2 million tons/ annum.

(Nearly 2.5 tons (O.D) of bagasse or 2.3 tons (O.D) of wheat straw are

needed to produce one ton of paper.)

Recycled fiber/waste paper based.Of the total 653 paper mills in operation

more than two thirds of the mills use RCF/waste paper as the primary fiber

source, contributing about 4.72 million tons per annum or 47% of the countrys

total production of paper/paper board and newsprint.

(Nearly 1.33 tons of recycled/waste paper is required to produce one ton of

paper.)

39%

31%

30 %

1970 2000 2011

7 %

9%

84%

31%22 %

47%

Forestbased RecycledFiber Agrobased

22 %

47%

22 %31%

47%

22 %31%

47%

22 %

2011

31%

47%

22 %

39%

31%

30 %

2000

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The details of different varieties of papers such as writing/printing, packaging &

newsprint produced from different segments of paper industry are shown in

Table.2 & Fig. 5.

Table. 2

Variety wise production of paper from di fferent raw materials (2010-11)

(million tons)Variety of

paper

Wood based Agro

based

RCF/Waste

paper based

Total

Writing/printing 2.36 0.73 0.81 3.90

Packaging 0.77 1.50 3.15 5.42

Newsprint 0.03 Nil 0.76 0.79

Grand Total 3.16 2.23 4.72 10.11Source: Industry & CPPRI

Fig. 5

Variety wise produc tion o f paper from different segments of Indian paper

industry

Source: Industry

1.5 Prospects of Paper Industry- Consumpt ion & 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 usedas basis to determine the growth trend in the 12th Five year plan (2012-17) and the

forecast for the next 15 years has been made1.

In scenario 2, consumption forecast has been made based on the following

assumptions:

1 Baseline scenario assumes a simple growth of 7.85% for consumption. Growth, therefore, tapers off in eachsuccessive year.

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(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. With universalisation of

education and increase in the period spend on education, elasticity of

consumption of writing paper could be higher than one. However, despite a

lower per capita consumption relative to other countries, increasing access tointernet and substitution of writing/priniting material by the electronic mode,

elasticity of consumption has been taken at 0.9.

(b) For packaging paper, the tracking variable is the likely manufacturing growth.

Since the share of the manufacturing sector is proposed to be increased from

existing 16% to 25% in next 10 years, manufacturing growth is expected to

remain higher than the GDP growth. The approach paper to the 12th Five

Year Plan has taken manufacturing growth of 9.8% at the base case

scenario; we 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 3:

Table: 3

Projected Consumpt ion of Paper (Million Tons)

Writing

paper

Packaging

Paper

News Print Total

consumption

Baseline

Scenario2010-11 4.0 5.4 1.7 11.2 11.22011-12 4.3 5.9 1.8 12.0 12.12012-13 4.6 6.4 1.9 13.0 13.02013-14 5.0 7.1 2.1 14.2 13.82014-15 5.4 7.8 2.2 15.4 14.72015-16 5.8 8.6 2.4 16.8 15.62016-17 6.3 9.4 2.6 18.4 16.52021-22 9.3 15.2 3.9 28.4 21.82024-25 11.8 20.2 4.9 36.9 23.5

2026-27 13.8 24.5 5.7 43.9 25.3Overall paper consumption in the baseline scenario is projected to increase to 16.5

million tons in 2016-17 and reach 25.3 million tons in 2026-27. In the alternative

scenario, which appears to be more realistic, the consumption increases to 18.4

million tons in 2016-17 (the terminal year of the 12th Plan) and to 43.9 million tons in

2026-27.

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The estimates for production during the 12th Five Year Plan (2012-17) and in the

next 15 years have also been derived for both the alternate scenarios. Estimates of

production of various paper grades based on wood, agro residues & recycled paper

have also been projected.

In the baseline scenario, it is assumed that growth in availability of raw material will

continue to be same as in the past2

. In scenario 2, following growth rates areassumed for the three alternate raw materials sources.

(a) For the wood based sector, the availability is projected to increase at an

annual rate of 8%.

(b) For the agro based sector, the projected growth assumed is also 8%. This

growth would, however, be feasible provided technology is developed for the

use of rice straw in paper making, particularly for the packaging paper and

also assuming that bagasse will be available for the paper industry.

(c) The growth in availability of recycled paper is assumed at 10%. Initiatives

have been proposed for an increased availability of the used paper for

recycling.

Based on the above assumptions, the paper production at the baseline scenario and

the alternative scenario is indicated in the table below:

Table: 4Projected Production of Paper (Million tons)

WoodResources

Agro Basedresources

RecycledPaper

TotalProduction

Baselineproduction

2010-11 3.2 2.2 4.7 10.1 10.12011-12 3.4 2.3 5.1 10.9 10.92012-13 3.7 2.5 5.7 11.8 11.7

2013-14 4.0 2.7 6.2 12.9 12.52014-15 4.3 2.9 6.8 14.1 13.32015-16 4.6 3.2 7.5 15.3 14.12016-17 5.0 3.4 8.3 16.7 14.82022-23 8.0 5.4 14.7 28.0 19.62024-25 9.3 6.3 17.8 33.4 22.02026-27 10.8 7.4 21.5 39.7 23.5

The production of paper is expected to increase to 16.7 million tons in 2016-17 and

further to 39.7 million tons in 2026-27 as shown in Fig. 6.

2 A simple average annual growth of 7.4% has been assumed. Growth, therefore, tapers off in subsequent years.

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Fig. 6

Projected Consumption & Production of Paper

1.6 Scenario of Export/Import of paper/paper board and newsprint

India imports only certain speciality paper & paper board, mainly coated varieties

and art paper. The volume of the import of paper and paper board was around

0.3 million tons (per annum) during the period 2005-06 which increased to

around 0.5 million tons during the period 2010-11, contributing around 5% of the

total consumption of paper and paper board and almost similar quantities of

paper/paper board are exported. As far as newsprint is concerned, the countryimports more than 50% of its demand of newsprint and exports a very small

quantity. During the year 2010-11 nearly 1.22 million tons of newsprint was

imported against the total consumption of around 2 million tons and 0.009

million tons was exported.

Table. 5 indicates the export & import of paper, paper board & newsprint during

the last decade.

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Table. 5

Export & Import of Paper, Paper Board & Newsprint, million tons

Particulars 2001-

02

2002-

03

2003-

04

2004-

05

2005-

06

2006-

07

2007-

08

2008-

09

2009-

10

2010-

11

Paper/paper

boardEXPORT 0.18 0.22 0.23 0.28 0.304 0.339 0.325 0.334 0.369 0.518

Newsprint EXPORT 0.001 0.006 0.003 0.005 0.008 0.004 0.004 0.006 0.013 0.009

Total

Export0.181 0.226 0.233 0.285 0.312 0.343 0.329 0.340 0.382 0.527

Paper/paper

board IMPORT 0.11 0.15 0.24 0.19 0.291 0.348 0.451 0.437 0.614 0.632

Newsprint IMPORT 0.45 0.54 0.77 0.68 0.69 0.79 0.89 0.97 0.85 0.95

Total Import 0.56 0.69 1.01 0.87 0.981 1.138 1.341 1.407 1.464 1.582

Source: CMIE

The dependency on import for paper, however, would continue to exist. The total

import of paper (mostly the newsprint) would increase from about 1 million tons in

2010-11 to 1.7 million tons in 2016-17 and further to 4.3 million tons in 2026-27.

Table: 6

Projected Imports of paper (Million tons)

TotalConsumption

Imports DomesticConsumption

2010-11 11.2 1.0 10.12011-12 12.0 1.1 10.92012-13 13.0 1.2 11.82013-14 14.2 1.3 12.9

2014-15 15.4 1.4 14.12015-16 16.8 1.5 15.32016-17 18.4 1.7 16.72022-23 31.0 2.9 28.02024-25 36.9 3.5 33.42026-27 43.9 4.3 39.7

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Rice Straw:Major portion is burnt in the field itself and a little portion is used

as cattle feed & for paper making.

2.2.1 Present Status of Bagasse Production in the Country and its

Availabi li ty to Paper Industry

Almost 350 million tons of sugar cane is produced in the country. Only 45% of

the total sugar cane produced reaches the organised sector i.e. sugar mills.

Thus only 162 million tons is crushed in sugar mills, producing around 53 million

tons/annum (33% of cane crushed) of bagasse.

Approximately 82% of the bagasse generated in a sugar mill is consumed in the

mill itself as a fuel to meet process demand of steam and power. Thus only 18%

bagasse (around 10 million tons) is available for other uses.

Sugar mills give preference to use bagasse for generation of power through co-generation due to incentives being provided by the government for non-

conventional energy. As per estimates, around 5.0 million tons of bagasse is

diverted for paper making.

2.2.2 Present Status of Wheat straw Production in the Country and

Its Availability to Paper Industry

India is the second largest wheat producer in the world after China and accounts

for about 12% to the global wheat production. Nearly 80 million tons of wheat is

produced in the country. Uttar Pradesh with a share of 33.7% is the majorcontributor, followed by Punjab (21%), Haryana (13%) and Madhya Pradesh

(9.6%).

Along with wheat an equivalent amount of straw is produced. Thus the total

production of wheat straw in the country is around 80 million tons/annum. All the

wheat straw is not fully recovered by the farmers e.g., in case of combine

harvester more than 25% straw is left in the field as it cuts the plant from a

certain height. The left over wheat straw is burnt in the field causing air pollution.

More than 75% of wheat straw collected from fields is utilised as cattle feed.Major states where paper mills use wheat straw as fibrous raw material for paper

making are Uttar Pradesh, Punjab and Uttrakhand. Kashipur and Muzaffarnagar

have cluster of small paper mills which consume more than 0.6 million tons of

wheat straw. The following table shows the gross & net availability of various

non-wood raw materials in India.

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Table. 7

Availabil ity of Agro based raw materials

(million tons/annum)

S.

No.

Particulars Bagasse Wheat

Straw

Rice

Straw

Jute/

Kenaf

Total

1 Gross

Availability

53.0 115 58.0 3.0 242.9

2 Net Availability 5.2 2.6 16.0 0.5 21.8

Source: Industry

2.3 Waste Paper Based Mil ls

(i) The requirement of Recycled fibre/Waste Paper as a raw material is sourced

indigenously as well as through imports. The availability of indigenous waste

paper is inadequate, as a result mills rely heavily on waste paper imports tomeet the demand of raw material. Presently around 3.0 million tons of waste

paper is sourced indigenously and 4.0 million tons is being imported. The

share of imported waste paper is 57% of total RCF requirement.

Table.8

Status of availability o f RCF/waste paperMillion tons % Share

1 Indigenously recovered

waste paper (27% of total

consumption)

3.0 43

2 Waste paper impo rt 4.0 57

TOTAL 7.0

Source: Industry .

(ii) The inadequate availability of indigenous waste paper for papermaking is

mainly attributed to the fact that although most of the consumed paper is

collected, it is used for multiple purpose and not solely for paper production. For

instance, note books and text books collected from the houses are used for

wrapping and packing of various items sold by vendors of food products,

envelop making, etc. At present 95% of waste paper collection system is in the

hands of the unorganised sector comprising of rag pickers and scrap dealers.

There is no legislation which could promote resource recycling and thereby

increase the recovery of waste paper.

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2.3.1 Current status of waste paper utilization

The RCF/ WP as a raw material is best suited for following end products

- Newsprint

- Duplex board- Kraft paper

Processing of waste paper to obtain clean stock for paper making involves a

number of cleaning stages to remove contaminants present in the waste paper,

such as iron clips, latex, wax, inks, etc., and one of the major technological issue

is the presence of high level of contaminants in imported waste paper, which

requires appropriate process configuration with state-of-the-art technologies to

produce a clean stock. Majority of the mills are lacking in state-of-the-art

processing technologies.

2.3.2 Future outlook

Product wise demand growth of RCF/WP based industryThe average growth rate for this segment is estimated at 7.8%, with relatively

higher growth rate for packaging products i.e. duplex board and kraft paper.

Paper board and newsprint production from RCF/WP is estimated at 11.7

million tons by the year 2025.

Table. 9

Product wise pattern of growth demand (Million tons)Product Growth

%

Current

domestic

production

Current

import

Current

Consumption

Production

by 2025

1 Writing Printing 7 0.81 - 0.81 1.9

2 Packaging

(Duplex Board &

Kraft)

9 3.15 - 3.15 8.2

3 Newsprint 6 0.76 0.95 1.71 1.6

Total 7.8 4.72 0.95 5.67 11.7

Source: Industry

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Raw material requirement to meet the future demand

The production of paper, paper board and newsprint from RCF/WP based

industry by 2025 would be around 11.7 million tons and to achieve this theadditional raw material requirement of RCF/ WP would be around 9.3

million tons.

In a scenario where waste paper recovery remains static at the current

level of 27%, the share of imported waste paper will be 52% and would

require substantial foreign exchange component in manufacturing cost. In

case the waste paper recovery levels are increased to 50%, through the

adoption of a well designed mechanism, the share of indigenous waste

paper will be about 90% and result in substantial cost advantage to the

RCF based mills. The different scenarios are illustrated in Tables 10 & 11.

(i) Scenario-1 - Projected demand of waste paper for next five years,

considering that indigenous recovery rate does not improve from the

current level of 27%.

Table. 10

Projected demand of waste paper for next five years without

improvement in current recovery rate*(Million tons)

Year

2011-12 2012-13 2013-14 2014-15 2015-16

Total Paper & Paperboard

consumption (at average growth

rate of 7.8%)

12.0 12.9 13.8 14.6 15.5

Production through RCF/WP 5.1 5.5 5.8 6.2 6.6

Waste Paper requi rement to

meet the production

6.8 7.3 7.7 8.2 8.7

Indigenously recovered waste

paper (at 27% recovery rate)

3.2 3.5 3.7 3.9 4.2

Waste paper import 3.6 3.8 4.0 4.3 4.5

Share of Indigenous & Imported

waste paper

48%:52%

Source: Industry


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CHAPTER 3

STRATEGIES FOR ACHIEVING THE

ENVISAGED GROWTH:

CONSTRAINTS &

THE WAY FORWARD

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CHAPTER 3

The pulp and paper industry is expected to grow at the average rate of 7.8% per

annum to achieve the target production of 22 million tonnes in 2025. To meet

this target, industry needs raw material resources, infrastructure and capital.

The major requirements of the industry are listed below:

Raw material availability

Technological upgradation

Capacity addition

Environmental compliance

Skill development

R&D support

3.1 Major Constraints

The major constraints in way of achieving the projected growth rate by the

industry are summarised below:

Table.12

Major Constraints

Areas Constraints

(i) Raw material

Availabi li ty

Wood Based Mills

Acute and growing shortage of pulpwood compared

to demand Non availability of land for captive pulpwood

plantations

Lack of planning for integrated development of

wood based industries and plantations

Highly capital intensive nature of the industry with

long gestation period

Agro Based Mi lls

Incentives for utilization of bagasse for power

generation through cogeneration thereby restricting

the diversion of bagasse to the paper industry. Inefficient burning of bagasse in sugar mill boiler at

50% moisture results in lower thermal efficiency

thereby consuming more quantity of bagasse.

Harvesting mechanism of wheat mainly the

combine harvester which recovers only 75% of

straw and leaves 25% in the field itself which is

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(ii) Scenario-2 - Projected demand of waste paper for next five years, if theindigenous recovery rate increases from the current level of 27% to 50%.

Table.11

Projected demand of waste paper for next five years with improvement

in current level of recovery *(Million tons)

Year

2011-12 2012-13 2013-14 2014-15 2015-16

Total Paper & Paperboard

consumption (at average growth

rate of 7.8%)

12.0 12.9 13.8 14.6 15.5

Production through RCF/WP 5.1 5.5 5.8 6.2 6.6

Waste Paper requi rement to

meet the production

6.8 7.3 7.7 8.2 8.7

Indigenously recovered waste

paper (at 50% recovery rate)

6.0 6.4 6.9 7.3 7.7

Waste paper import 0.8 0.9 0.8 0.9 1.0Share of Indigenous & Imported

waste paper

89%:11%

Source: Industry

The first and foremost requirement for long term sustainability & growth of

RCF/WP based industry is to meet the waste paper requirement indigenously by

reducing the burden of imports of waste paper and improving the quality of

finished products i.e. newsprint and packaging grades (Duplex & kraft). Today

there is a complete lack of an effective collection mechanism which could

automatically divert RCF/ waste paper to the paper industry.


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burned by the farmer

Transportation of straw in loose form to paper mills

resulting in increase in cost of transportation by

more than 40%

Recycled /Waste paper

Lack of effective collection mechanism resulting inpoor recovery of waste paper,

Multiple alternate uses of collected waste paper

resulting in poor availability of indigenous waste

paper to paper mills thereby dependence on

imported waste paper

(ii) High Cost of

basic Inputs

viz. raw

material,

energy,chemicals etc.

The Indian paper industry uses 20% more raw

material; about 30% more energy, 200% more

water & 10% more chemicals as compared to a

modern European mill.

Need for quantifiable increase in productivity,quality improvement with reduced cost,

improvement in energy efficiency and better

compliance with environmental protection

legislation, safeguards for eco-sustainability of

products etc.

(iii) Scale of

operation/

adoption of

state-of-art

technologies

Obsolescence of technologies in most of the mills

Non-availability of tailor made technologies suitable

for prevalent scale of operations in Indian

conditions

Imported origin and high capital investment of thecutting edge technologies to achieve the

envisaged growth

(iv) Environmental

Compliance

Requirement of high capital investment in fiber

recovery systems / filtration system, tertiary

treatment systems like membrane filtration (

ultrafiltration / reverse osmosis ) activated carbon

filter, pressure sand filter , upgradation

/modification of existing ETPs etc to increase

reuse / recycle of back water or treated mill effluent

and zero discharge level(v) Lack of Skilled

Manpower

Lack of adequate infrastructure or facilities /

training centre or courses to provide skilled

manpower for pulp and paper sector

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3.2 Strategies required to achieve envisaged growth

A structured strategic plan as proposed below is needed to address the issues

and to ensure that the envisaged growth targets are met by the Industry.

Table.13Strategic structured plan for addressing the issues

Target /Goal Intervention

Sustained

supply of raw

material base

Wood

Large scale promotion of agro-forestry plantations

integrated with wood based industries and addressing the

constraints in growth of agro forestry plantations.

Restoration of 28.84 million ha. degraded forest lands to

optimum sustainable productivity through technology based

intervention by way of strengthening & involvement of State

Forest Corporations. Substantial improvement in productivity of agro forestry

plantations and reforestation projects based on genetically

improved planting stock / clones and improved package of

silviculture practices.

Supporting aforesaid initiatives with innovative policy

initiatives, optimum financial & professional management

inputs and strengthening of technical extension services.

Agro residues

Bagasse

Review/Revision of Incentivisation policy for use of bagasse

for power generation in sugar mills

Pre-drying of bagasse for better thermal efficiency of

bagasse-based boilers in sugar mills

Straws

Improved/mechanised harvesting for 100% recovery of

Wheat Straw

Bailing of Wheat straw

Identification and promotion of alternate ligno-cellulosic raw

materials.

Sisal, banana, pineapple, groundnut shell and other annual

grasses need to be explored through innovative R&D & pilot scale

studies. Intensive R&D efforts are required to use rice straw as

raw material

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Recycled/Waste paper

Setting up of RCF/Waste paper collection centers

Possibility of imposition of legislations

Awareness creation

Strengthening the capability of CPPRI for conducting R&D

activities and Pilot plant trials Modernization of entire RCF/WP based industry by way of

adopting state-of-the art technology to manufacture

newsprint & packaging grades of paper.

Capacity

addition

Expansion of production capacity of existing units through

adoption of state-of-the art / cutting edge technologies

Setting up of greenfield mills with modern fiber line, energy

efficient and environmentally sustainable technologies

The cost of expansion and setting up of new units is very high,

therefore Government Policies should encourage leading

machinery manufacturers (For example, METSO, Andritz andothers ) to establish manufacturing facilities in India. Most of

these manufacturers have established manufacturing facilities

in China and other Asian countries.

The above initiative will help the paper industry to grow

because the capital cost of indigenously manufactured high

technology machinery will reduce significantly.

Energy related

issues

Policy intervention for allocation of coal for industries located in

different parts of the country.

Ensuring improved availability & quality of coal at reasonablecost to the mills through on line bidding

Paper industry uses significant quantities of imported coal for

the energy needs. Effective duty on coal works out to nearly

10%.

Therefore in order to support the energy needs of the industry,

Government should bring coal under Nil duty.

Sourcing of an appropriate portion of non-fossil fuels like rice

husk to paper industry.

Shifting to bio fuel / gaseous fuels instead of coal

Improvement of energy efficiency by introduction of energyefficient systems at generation, distribution and consumption

levels.

Technology

intervention

for improved

Energy

Efficiency

Improved automation and control

Development of suitable technologies by way of scaling down

the technologies to required level of agro & RCF based mills.

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Technology

intervention

for

Environmental

Compliance

Development of indigenous technologies to make agro based

industries competitive and environmentally sustainable.

Common ETP for cluster of agro and RCF based mills

Common Chemical recovery for agro based mills particularly

manufacturing kraft paper.

R&D Support

to Industry

Energy Sector

Comprehensive energy audit of pulp & paper mills

Process optimisation for energy conservation

Selection and adoption of energy efficient technologies and

equipments.

Environmental Sector

Water conservation through development of closed loop for

reuse of back water Conversion of wastes to value added products.

Support to

Printing

Industry

Technological upgradation

Facilitation of appropriate infrastructure

Institutional framework for skill development and training of

manpower in latest technologies / machines

Adequate testing and research facilities

Need for level playing field : while the import of paper and

paper board invites a total duty of around 24.57% , the import

of printed material takes place at nil / relatively much lowercustom duty . As a consequence the import of printed materials

is gradually increasing inspite of the fact that India has finest

printing units in the country

Review of the duty structure on printed materials and import of

state of art printed machinery

Creation of required infrastructure to meet international

requirements

Developing strategies to improve share in global market of

export of printing materials

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CHAPTER 4

TECHNOLOGY & INNOVATION

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CHAPTER 4

4.1 Technology Intervention to achieve the Projected Growth Rate

There is an urgent need for the adoption of cutting edge technologies to achievethe projected growth rate, energy efficiency and quality improvement in the

Indian Pulp & Paper Industry. The industry requires investment in technology in

different unit operations leading to capacity expansion in a planned manner.

Technological interventions are required in this perspective in the following

areas.

Raw material processing and handling

Manufacturing process :

Pulping

Pulp washing Bleaching

Paper machine

Chemical recovery

Environmental Management

4.2 Technology Intervention to Address the Environmental Issues

There is an urgent need for the adoption of cutting edge technologies and

innovative R&D to address the following environmental issues being faced by

the Indian Pulp & Paper Industry.

High effluent load

Colour removal

Black liquor management ( agro based kraft mills)

Solid waste management

Air pollution control

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The technological interventions needed to address these environmental issues

are summarised as under

Table.14

Technology interventions for at source reduction

TechnologyMeasures

Major Technology Inputs Additional Benefits

(a) At Source

Reduction

Continuous Digester Reduction in Energy

consumption

Reduction in Water Consumption

Less cooking time

Improved pulp quality

Reduced air emission

(mercaptans)

Screw Press ( for agro based

mills)

Improved black liquor extraction

leading to improved chemicalrecovery efficiency

Oxygen delignification Reduced pollution load

Increased reuse and recycling of

back water

New Generation Pulp

Washers Reduced COD Carry over

Reduction in Water

Consumption

Reduced chemical consumption

in subsequent bleaching stage

Improved black liquor solidsconcentration leading to

improved energy efficiency

(specially in agro based mills)

High Consistency Pulper (

RCF based Mills) Reduction in Water Consumption

Improved pulp quality

Less pulping time

Elemental Chlorine free

bleaching Reduced pollution load including

AOX

Increased reuse and recycling ofback water

New Generation Showers on

Paper Machine Reduction in Water Consumption

Less Energy consumption

Improved washing

Chemical recovery system

for agro based mills Efficient black liquor

management

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Fiber recovery units like poly

disc filters etc Reduction in suspended solids

Resource conservation

Improved reuse and recycling of

back water

b.) End of Pipe

Treatment

Measures

ETP Up gradation using

combination of diffusedaeration and surface aerators

Improved ETP Performance

Membrane Filtration

( Ultrafiltration & Reverse

Osmosis)

Removal of colour , TDS &

suspended solids

Increased reuse and recycle of

mill effluent

Activated carbon/ pressure

sand filter Removal of colour ,

Increased reuse and recycle of

mill effluent

Recovery of fillers and other

organic and inorganic saltsfrom waste water

Resource conservation

Improved mill economics Increased reuse and recycle of

mill effluent

Efficient sludge dewatering

system

Solid waste minimisation

Sludge Incineration System Energy recovery

Prevention of contamination of

ground / surface water

Scientific land filling / landapplication

Solid waste minimisation

Conversion to value added

products Solid waste minimisation/

economic benefits

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4.3 Strengthening of capabilit ies for indigenous machinery

manufacturing facilities

One of the barriers for growth of the industry is the need for high investments at

very low rates of return. The cost of expansion and setting up of new units isvery high because of the high cost of imported technologies. The major

technology suppliers are located in Europe, J apan and China, and the cost of

acquiring such machinery, after the addition of substantial custom duties, is very

high. Therefore leading companies in machinery manufacture should be

encouraged to set up plants in India.

Indigenous machinery manufacturers also require support for developing

suitable equipments. Requisite financial and technical support should be

provided for such ventures.

4.4 Strengthening of R&D support

The possibility of adoption of modern technologies, which have significant effect

on cost and quality of products, needs to be explored keeping in view their long

term sustainability. For addressing the energy and environmental issues there

is a need to strengthen R&D institutions like CPPRI with additional

infrastructure and manpower through adequate financial support under 12th Five

year plan.

Further there is a need for a greater synergy between industry, technology

suppliers and R&D institutes to develop indigenous technologies suitable to theIndian context.

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CHAPTER 5

HUMAN RESOURCE

DEVELOPMENT

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CHAPTER 5

5.1 Current Status on Availability of Process Stream Technical

Manpower for the Pulp and Paper Industry

The plant and machinery operations of the paper mills presently depend largelyon semi-skilled or unskilled workers. They look after the operation and

maintenance of the mills without much understanding of the processes. Almost

all segments of the industry are affected but the most affected are the medium

and small mills, which depend solely on local work force. Absence of trained and

skilled workers in the industry has created problems of quality and productivity.

Health, safety and environmental standards are often overlooked on account of

negligence and lack of knowledge and it results in accidents and damage to

environment.

5.2 Quantum of Technical Manpower Existing in the Industry

In large mills (mainly wood based) the technical manpower per ton of paper

produced per day is around 2.5, on an average. As around 30% of paper is

produced by this segment of paper mills, nearly 21000 qualified technical

persons are employed by this category of mills.

In the medium size mills (mainly agro based) the technical manpower per ton of

paper produced is also 2.5. Nearly 2.6 million tons of paper per annum is

produced by these mills, implying that nearly 15000 technically qualified workers

are employed by this category of mills.

In small mills (mainly waste paper) technical manpower per ton of paper

produced is around 1.0; so technical manpower employed by this category of

mills is estimated at around 15000.

Thus total technically qualified manpower in Indian paper industry, both in

process and non process streams, in all three sectors is approximately 51000.

5.3 Requirement of Technical Manpower in future by the Industry

There is an acute shortage of trained manpower particularly in the newly

established mills or mills which are going for capacity expansion. Future

requirement of manpower are estimated to be 4% of the existing manpower for

capacity expansion, and another 3% technical manpower is required every year

to cope with superannuation. This shows that the requirement of additional

technical manpower at the beginning of 12th Five year plan (Year-2012) would

be 3570, which will increase to 4680 by 2017 i.e. by the end of the plan period

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(taking an average growth rate of 7.8%). This would go up to 8040 by 2027. Out

of the total manpower required by the paper industry 40% is for process stream

and 60% for non-process technical stream.

Table.15

Addi tional manpower requi red by the Indian paper industry

Total Technical Manpower

requirementProcess stream Non-process stream

2012(Beginning

of 12th

plan)

2017(end of

12th

plan)

2022 2027 2012(Beginning

of 12th

plan)

2017(end of

12th

plan)

2022 2027 2012(Beginning

of 12th

plan)

2017(end of

12th

plan)

2022 2027

3570 4680 6135 8040 1428 1872 2454 3216 2142 2808 3681 4824


5.3.1 Skil led manpower requirement in Pulp & Paper sector for 12th

plan and on long term basis

The technical manpower required is distributed as

15% as Graduate Engineers

25% Diploma holders

60% of ITI level

An overview of the projected manpower demand is given below:

Table.16

Technical manpower required by the Indian paper industry

YEAR

2012(Beginning of

12th

plan)

2017(End of 12th plan)

2022 2027

Total 3570 4680 6135 8040

Graduate Engg. 535 702 920 1206

Diploma holder 890 1170 1534 2010

ITIs 2145 2808 3681 4824Source: Industry/CPPRI

The distribution of the process & non-process stream technical manpower

required by the Industry in the ratio of 40%to60% is given in the table below

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Table.17

Process stream technical manpower required by the Indian paper industry

YEAR

2012(Beginning of 12

thplan)

2017

(end of 12th plan

2022 2027

Pro-

cess

Stream

Non-

process

stream

Pro-

cess

Stream

Non-

process

stream

Pro-

Cess

Stream

Non-

process

stream

Pro-

cess

Stream

Non-

process

stream

Graduate

Engg.

214 321 281 421 368 552 483 723

Diploma

holders

357 535 462 701 613 920 815 1205

ITIs 857 1286 1129 1686 1473 2209 1918 2896

Total 1428 2142 1872 2808 2454 3681 3216 4824


5.4 Existing Institutions imparting various courses in the area of

Pulp & Paper in the Country

The following table shows the details of existing training centers in the country

which offer B.Tech/M.Sc Degree/Diploma courses in the area of pulp and paper.

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Table.18

Institutions imparting training in the area of pulp & paper

S. No. Name of Course Univ/

Institution

Basic

Qualifications

No. of

seats

1. B.Tech in Pulp

& Paper (Four years)

IIT Roorkee 10+2 90

2. B.Tech in Pulp


Bangurnagar Degree

College, Dandeli

10+2 25

3. B.Tech in Pulp


Laxmi Narayan

Institute of

Technology

Nagpur

10+2 20

4. M.Sc in Pulp and paper(Two years)

Forest ResearchInstitute,

Dehradun & CPPRI

Saharanpur

B.Sc 20

5. B.Tech in Pulp & Paper

(Four years)

Sant longowal Inst.

Longowal,Punjab.

10+2 30

6. B.Tech in Chemical

with specialization in

Pulp & Paper

(Four years)

Amrawati

University (MS)

10+2 10

7. Diploma in Pulp & Paper(3.5 years)

SPB Institute ofTechnology,

Tiruchirapalli

High School 50

8. Diploma in Pulp and Paper

(Three Years)

SJ P Polytechnic,

Yamunanagar

High school 71

TOTAL 316Source: Industry/CPPRI

5.5 Gap between requirement & availability of Process Stream

Technical Manpower

Availability of process stream technical manpower from the eight existing

institutions (as shown in the above tables) is only 316 per year, against a

requirement of 571 at the level of B.Tech & Diploma. This shows that there is a

big gap between the requirement & the availability of technically trained

manpower to meet even the present demand. There is a need to strengthen the

existing Institutions and to open new ones at both graduate & diploma levels.

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5.6 Milestones to be achieved

Creation of infrastructure in the 56 ITIs located near the existing

clusters of pulp & paper mills for starting a certificate course in pulp &

paper to meet the industrys requirement of the technical manpower by

the end of 12th

plan.

Upgradation of capabilities of 8 existing Institutions in respect of

revision of courses to suit the requirement of the industry.

Strengthening of CPPRI capabilities in the area of HRD & Training to

enhance its capabilities for advanced capsule courses as per the need

of industry for sponsored candidates at middle management levels.

Constitution of a committee for framing the course content with the

involvement of CPPRI and industry experts, and accreditation of thecourse by the Director General of Employment & Training (DGET).

Formation of sector specific council for skill development with the

involvement of pulp & paper industry representatives.

5.7 Details of Budget for HRD

5.7.1 Strengthening of ITIs for starting certificate course

Total number of ITIs to be taken up in the 12th Plan = 56

Table. 19

Budget allocation to ITIs

Year Number in ITIs Fund required

Rs. (In Crore)

2011-12 & 2012-13 25 32.5

2014-15 15 19.5

2015-16 16 20.8

Total 56 72.8

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5.7.2 Upgradation of facilities of h igher level institutions

Total number of existing institutions = 8

Table. 20

Funds required for upgradationYear Fund required

Rs. (In Crore)

2012-14 5

2014-15 5

Total funds required in 12 plan 10

5.7.3 Strengthening of CPPRI in the area of HRD & Training

Civil Works - Rs. 15.34 Crore

(including hotel, classroom,

furniture, interior, dining hall,

crecreation facilities etc.)

Pre execution & running expenditure

Including faculty (For Five years) - Rs. 2.16 Crore_________________________________________________________

Total Fund Required = 17.50 Crore

_________________________________________________________

This activity is to be completed in the 2nd & 3rd years of the 12th Plan period.

Sub total = 100.30 crore

Funds to be allocated to CPPRI (nodal agency)

for pre-project activities excluding activities

at 5.7.3 @ 5% of the total budget = Rs. 4.14 crore

Total budget requirement in 12th plan = Rs. 104.44 crore

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CHAPTER 6

FISCAL AND TRADE POLICY

RELATED ISSUES

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CHAPTER 6

Fiscal relief measures for Indian Paper Industry

6.1 Customs Duty(i) In view of the increasing demand on wood based fiber and the constraints

envisaged on increasing the captive plantation, customs duty on import of fiber

viz. wood logs/bamboo, wood/bamboo chips, all types of pulp etc. should be

made zero till the time the proposed MSP Scheme starts yielding results.

(ii) It is commonly acknowledged that as a result of global melt-down the Asian

paper market has become very vulnerable. Major players in Indonesia and China

are all set to push large quantities of Coated and Wood-free Grades of paper

into the Indian paper market. China has recently re- introduced export incentives

which were withdrawn after protests from other global players.The quickest possible way to thwart the emerging threat of unbridled imports is

to enhance the peak rate of Basic Custom Duty from current level of 10% to 15%

on paper/paperboards and to re-introduce the component of SAD.

(iii) Paper industry is a power intensive, continuous process industry. Today the

industry suffers due to high cost of power and erratic / inadequate supply of coal.

In the absence of Core Sector Status, the industry is not sure of getting

uninterrupted supply of quality coal from local collieries.

Customs duty is levied on coal imports with Basic Duty @ 3% and CVD @ 5%.

In addition, Educational Cess is levied at 3% on the duty. The effective dutyworks out to nearly 10%. Most of the paper mills use imported coal for their

energy needs.

The committee recommends duty free import of coal for paper industry.

(iv) Import of printed materials at zero or lower custom duty should be controlled to

protect the printing industry and promote the use of indigenous paper.

(v) Exemption of customs duty on capital goods for captive co-generation of power /

steam for production of paper against the end-use certificate.

(vi) Duty free imports of waste paper should be allowed to meet the fibre demand of

the industry.

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6.2 Assistance to Forestry/ plantation

(i) Financial assistance for raising pulpwood plantations in partnership with Industry

should be made at specially designed interest rates to help make it more farmer

friendly. The standing crop should be acceptable as a security.

(ii) Insurance for pulpwood plantation is not easily available to the farmers. This

should be made available.

(iii) Trade of the plantation produce should be made easy and free from such

barriers as requirement of way bills, payment of agricultural and/or sales tax,

entry tax between States etc.

(iv) Since the mills are promoting farm forestry very aggressively to the advantage of

the farmers, Central and/or State level notifications to discourage the same

should be withdrawn and prohibited. (Example: recent notification in the State of

Karnataka against plantation of eucalyptus).

6.3 CENVAT / GST

(i) It is recommended that GST should be allowed at lowest possible rate for the

paper industry.

(ii) The paper industry requires huge capital inputs and consequentially avails of

large cenvat credits on capital goods. This credit is available for utilisation over

two years. However, it is experienced, that due to disproportionately large capital

investments a huge tie up of cenvat credit takes place well beyond 2 years.

Therefore, a suitable mechanism for adjustment of large cenvat credits arising

out of investments is urgently needed.

(iii) It is proposed that GST should completely neutralize all input taxes which are

levied by the Centre and States by providing for input tax credit seamlessly

across the supply chain. Rules must be framed for claim of refund of input credit

not utilized for set off against output, and the same must be refunded within 30

days of filing of claim.

6.4 Creation of Technology Up-gradation Fund (TUF)

For various historical reasons the paper industry suffers from technological

obsolescence to a great extent. Practically all indigenous mills are now

consciously focusing on clean technologies which are cost effective and are

bracing up to assimilate global trends, which favour high-speed machines with

new configurations, for large-scale production. Domestic industry needs to be

internationally competitive. To be able to meet the emerging challenges,

domestically and globally, it is essential for the paper industry to have access to

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timely and adequate capital at internationally comparable rates of interest in

order to upgrade the facilities.

It is recommended that a suitable Technology Upgradation Fund Scheme may

be formulated to address the much needed modernization and upgradation of

paper mills.

6.5 Direct Taxes

To support the domestic paper industry against various odds the Government

may also consider the following fiscal relief measures in the present demanding

times

(i) Reintroduction of Investment Allowance : Earlier deduction was admissible

@ 25% of the actual cost of Plant & Machinery acquired between 1.4.1976 and

31.3.1990. It is imperative that Investment Allowance provisions are re-

introduced in view of the current inflationary trends, the high cost of borrowingcapital, and the increase in replacement value of Plant & Machinery.

(ii) Depreciation on Plant & Machinery: This was admissible @ 25% (of

Cost/WDV) upto 31.3.2005, and was reduced to 15% w.e.f. 1.4.2005. In view of

the fast changing technologies in this sector, which make Plant & machinery

obsolete in a short span, it is necessary that depreciation rate is restored to the

earlier rate of 25%.

(iii) Extension of time limit u/s 80 IA : A new undertaking set up in any part of

India for the generation/ distribution of power is eligible for deduction U/S 80IA,

provided it began its operations at any time between 01.04.1993 and

31.03.2010. It is requested that this time limit should be extended based on thefollowing considerations:

India is still having shortage of power and large industries can not be set up

or made viable without having their own captive power plant.

Setting up of power generation plant is capital intensive and does not make

mother project viable unless the 80IA benefit is extended.

80IA benefit would promote setting up captive power plants by industries,

which will reduce the load on the National Grid.

CERC has allowed free access of power, making power very costly in some

of the states, and setting up of captive power plants is essential for national

growth.

In view of the above, it is requested that time limit of 31.03.2010 for eligibility ofdeduction under U/S 80IA for power generation / distribution should be extendedupto 31.03.2020

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6.6 Import policy

(i) Policies on import should be conducive for import of equipments, instruments,

and raw materials which have bearing on the quality of the product and the

environment. Therefore, duty free import of paper making plant & machinery

(new or used) may be allowed till indigenous capabilities are developed

(ii) The cost of raw material and fuel in India are very high while overseas

competitors have access to captive plantations and cheaper fuels. Even if fiber

is imported, the cost for domestic producers is higher vis--vis their overseas

competitors. Till such time as the proposed model for availability of raw material

through reforestation of degraded forest land is realised, the industry should get

protection in the form of higher customs duty on import of paper.

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CHAPTER 7

FLOW OF RESOURCES &

BUDGETARY REQUIREMENTS

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CHAPTER 7

A. Flow of Resources for 12th Five Year Plan

7.1 Finances for improving the raw material base and quality

7.1.1 Wood

The financial resources required for restoration/afforestation by using

appropriate local indigenous fast growing species under the proposed MSP plan

have been worked out approximately as under:

Tentative Target for the 12th Plan period : 500,000 ha of degraded forest land

Investment for execution of the scheme (from handing over of the approved

plans to the first cycle of harvesting at the end of 5 years) shall require Rs.

2750 Crore, which includes an investment of Rs 2500 crore (@Rs.50000 per

hectare for afforestation of 5, 00,000 ha. Degraded land) and Rs. 250 crore

(about 10% of 2500 crore) towards capital expenditure for land development

and provision of implements for the mechanization of operations. Means of

financing can be spelt out in the DPRs with the terms and conditions as

finalized among the stakeholders, particularly the participating Corporates, as

per the rules set out in the scheme.

Long Term Requirement of Finances for the MSP: As the above steps

take off successfully, plans for the 13th and 14th Plans can also be finalized.

Estimated investments @50,000 per hectare will be of the order of Rs.5000

Crore in each plan period, with one million hectares of land to be covered in

each plan.

7.1.2 Agro residues

In the case of agro based mills it is envisaged that no new projects will come

up during the next 15 years on account of limited availability of bagasse and

straws for new projects. However some capacity expansion in existing mills

can be expected.

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7.2 Modernization & expansion of existing mills

7.2.1 Wood based mills

Financial resources for the capacity expansion projects of wood based mills are

estimated below :

Target of additional production over next 15 years 3.0 million tons

Target for the 12th Five year plan (2012-17)

Funds requirement for 1.2 million [email protected],000 per annual ton

Funds requirement for Upgradation of the existingcapacity of 3.0 million tons @Rs.60,000 per

annual ton resulting in production gain of 20%(0.6 million tons)

1.2 million tons

Rs.12000 Crore

Rs.18000 Crore

Target for the 13th Five year p lan (2017 -22)

Requirement of funds for capacity addition of 0.6million tons through Greenfield projects @ Rs.

100,000 per annual tonne

Rs.6000 Crore

Target for the 14th Five year p lan (2022 -27)

Requirement for the third period of 5 years @

100,000 per annual ton for the balance 0.6 milliontons per year will be

Rs.6000 Crore

Total investment Rs 42000 Crore

7.2.2 Agro based mills

Modernization of the existing agro based mills will result in increase in production

from 2.23 million tons to 2.7 million tons within the next 5 years. An increase of

0.47 million tons in capacity during the period 2012-17 would require an

investment of 10,700 Crore in next five years for modernisation and capacityexpansion.

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7.2.3 Recycled/waste paper based mil ls

Modernization & expansion of existing RCF/WP based industry would require the

following financial resources in newsprint, duplex and kraft mills. (Source: INMA)

(a) Newsprint

Existing demand - 2.2 million ton

Growth in demand - 6%

Demand by 2025 - 5 million tons

Present domestic production - 1 million tons

Present import - 1.2 million tons

(Cost Rs.3,800 Crore)

Manufacture of quality Newsprint requires technologically advanced

manufacturing facilities which are capital intensive; as plant & machinery isnot manufactured in India and it will have to be imported.

Currently the Newsprint industry is not able to compete wit

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