3.1 The Problems in Foreseeing the Future Scenario
3.2 Pulp and Paper Sector: Outlook 2010
3.3 Recycled fibre based segment
3.4 Panels sector
The future scenario with respect to utilization of non wood and fibre sources in pulp and paper industries is difficult to foresee, as the present situation is fluid. Advocates of wood and bamboo utilization, represented by the Indian Paper Makers Association (IPMA) have strong arguments in favour of forest based sources (wood and bamboo) to sustain future pulp and paper industry in the face of globalization of Indian economy and international competition in respect of product quality and price. At the other end are the users of non wood fibre (other than bamboo) who feel that the future of pulp and paper industry lies in the utilization of non wood sources. This group is represented by the Indian Agro Paper Mills Association (IAPMA).
There is also a third group, consisting of small manufacturers who use a variety of agricultural residues and recycled fibre, who believe that the future is in creating "wealth from waste". Each group not only wants incentives from Government, but also withdrawal of concessions already sanctioned in favour of other groups. At centre stage is the Government itself, anxious to hasten economic liberalization and strengthen ecological security.
As far as panels industries are concerned, the conflicts of interest are not visible and the future trend (for the next 10-15 years at least) is more or less clear.
Before focusing on the status of non wood and recycled fibres towards 2010, these conflicting viewpoints will be discussed. As forest based raw material is the most favoured source for both pulp and paper and panels industries, the future role of non wood and recycled fibre sources will depend on the scenario with respect to forest based fibre sources. Hence, the points of view of this group will be examined first.
3.2.1 Forest based sources segment
3.2.2 Agricultural residues based segment
With an installed capacity of 1.47 million tonnes and production of 0.95 million TPA, the segment based on wood (and bamboo) is the most dominant segment in the pulp and paper field, not only in respect of quantity produced, but also product quality. There has been no green field investment for establishment of new forest sources based pulp and paper units in over a decade, on account of uncertainties about sustained availability of wood and bamboo. This sector is of the opinion that there are serious constraints for the growth of pulp and paper industry based on agriculture residues and waste paper because of:
· narrow product range and low product quality;
· uneconomic size;
· outdated technology;
· lack of chemical recovery and effluent treatment facilities;
· fluctuation in international prices of waste paper;
· uncertainties about long term availability of bagasse and cereal straw, because of alternative uses.
In view of these constraints, this sector strongly favours review of policies and measures to step up wood supplies. They have serious doubts about sustained supplies from natural forests and forest plantations in view of:
· intense biotic pressure on forests and plantations leading to illicit removal of firewood, excessive and uncontrolled grazing, fires, poor productivity, etc.;· competitive demands on available supplies.
The sector is not optimistic about meeting its requirement via farm forestry, as envisaged in the revised National Forest Policy (1988) because:
· Land holdings are small and fragmented;
· indebtedness of farmers, which forces them to dispose the produce indiscriminately;
· lack of location specific intercropping systems.
The strategy suggested by this sector is the adoption of policy to allow captive plantations by industries. Following advantages are foreseen in case this strategy is adopted:
· Intensively managed plantations, based on selected genetically superior planting stock in areas close to manufacturing units with short rotation harvesting cycles will provide high quality pulpwood at optimum costs;· Uniformity in raw material properties will facilitate standardization of manufacturing processes, resulting in higher recoveries and better product;
· Productivity in intensively managed plantations based on selected clones will be much higher. Industry has demonstrated that 23-39 m3/ha/year can be obtained compared to 6-10 m3/ha/year from eucalypt plantations based on traditional seed route, established by forest departments/corporations.
It is estimated that the extent of degraded/wastelands to be reclaimed is 130 million ha. A very small percentage of degraded land, if made available to the industry, it is felt by them, can solve the problem of raw material for ever. Any delay in effecting policy changes will, according to them, result in further degradation of the land and therefore, it is urged by this group that immediate decision needs to be taken in the matter.
There is strong opposition to this demand by environmentalists and non-governmental organizations. They feel that leasing land to industries to raise plantations will lead to:
· destruction of biodiversity;
· threat to the livelihood security of tribals, etc., depending on forest.
It is their view that subsistence and consumption should be met from forest and common lands and market (industry) demand from private (farm) land (Saxena, 1994). The debate on leasing land to industry for raising captive plantation has been going on for some time now and according to some indications, Government is inclined to take a decision in favour of the industries, with adequate safeguards to protect the environment and interests of tribals and others dependent on such forests for their livelihood.
With an installed capacity of 1.24 million tonnes and production of 0.9 million tonnes in 1995, the progress achieved by this sector is impressive, considering that, 25 years (1970) ago, the contribution of this sector was negligible. This was possible not only because of diminished wood supplies, but on account of incentives extended by the Government from time to time (see Section 1.4.4). The agriculture residue based sector is of the opinion that the future of Indian pulp and paper industry lies in more intensive utilization of these abundant resources (Tables 27 to 31). To achieve this, this sector wants the Government to further liberalize the fiscal policies in their favour:
· The benefit of concessional excise duty of 5% to mills utilizing more than 75% by weight of pulp made of "un-conventional" raw materials now available to first 10,000 tonnes clearance only. This restriction should be removed to enable the units to expand capacity to attain minimum economic size;· The steep reduction in customs duty on paper and paperboard (from 140% to 20%) and the facility to import the same as pulp under Open General Licence (OGL) have inflicted severe injury to local manufacturers, particularly those utilizing agricultural residues. Hence this should be reviewed and the duty on finished goods (paper and boards) should be raised to be on par with other finished goods (i.e., 30-40%);
· A long term policy of restricting excise duty on paper to 5% should be announced to enable this sector to plan expansion;
· Incentives to sugar mills to use alternate fuels and release bagasse;
· Incentives to introduce modern methods of collection and transportation of wheat and rice straw.
This sector also has made significant progress in the last few years. While in 1970, the production of paper based on this source was merely 5% amounting to 37,500 tonnes, the installed capacity increased to 1.26 million tonnes in 1994-95 and production to 650,000 tonnes (26% of production).
The small paper mills have been using a variety of recycled materials viz., hemp, jute, hessian apart from waste paper. But their role is limited and therefore waste paper alone is being considered in this sector. Globally, remarkable increases have been reported in the recycled fibre use by newsprint, writing and printing paper and tissue products segments. In India also, the outlook is bright despite the fact that rate of recovery is low, fibre quality is poor and requires incorporation of imported waste paper (of long fibre origin) to achieve satisfactory quality. This sector has urged the Government to extend following incentives and concessions:
· Abolition of customs duty on imports of waste paper;
· Abolition of sales tax on sale of waste paper;
· Concessional import duty for equipments and machines for recycling waste paper and 100% depreciation for the same.
The different sectors of pulp and paper industries have thus sought interventions and incentives from the Government. While the demands of agriculture residue sector and recycled fibre sector are mostly to continue existing concessions and withdraw some reliefs in import duties, those of the forest based sources sector is for a major policy decision with regard to facilitating captive industrial plantations. Even if this is acceded to, no drastic change in the likely scenario presented hereafter (Table 33) will occur, as it will take considerable time to identify suitable land and lease the same to the industry and for the industry to organize itself to undertake this stupendous task.
The following points require to be highlighted:
· Having established its suitability, availability by arrangement with sugar mills and feasibility for production in large integrated mills, bagasse has emerged as the principal raw material for paper and newsprint. It will soon be the most dominant material;· Although cereal straw is available in abundance and substantial quantity available to the industry, its utilization is yet to pick up. Although technical problems have been resolved, logistical issues like baling and transport are yet to be addressed. Its contribution will therefore be very much lesser than the potential. As it happened in the case of bagasse, it will take quite some time to establish itself. In the long run, however, it will be an extremely important source. Its contribution through 2010 is, however, foreseen to be limited;
· Several small mills and wood based mills incorporate imported long fibre pulp in the furnish to improve the quality of indigenous pulp. In addition, about 530,000 tonnes additional capacity is planned, based on imported pulp. Unless there is drastic increase in duty, pulp import will continue and remain an important source of fibre;
· Although there will be substantial increase in wood and bamboo output, the industry will have to depend on wood from farms, etc., raised under social forestry schemes and out of tie-up arrangements with farmers. The main source of bamboo will be households and committed supplies by the Government to weavers, tribals, etc.
Table 33 - Outlook 2010: Likely raw material supplies and production pulp and paper (million tonnes)
|
|
million tonnes |
|||
|
2000 |
2005 |
2010 |
||
|
Fibre Source |
||||
|
a) BAGASSE |
||||
|
|
1. Output |
60.0 |
75.0 |
90.0 |
|
2. Availability to pulp and paper industry |
6.0 |
9.0 |
12.0 |
|
|
3. Production |
1.1 |
1.6 |
2.6 |
|
|
b) RICE STRAW |
||||
|
|
1. Output |
18.0 |
21.0 |
24.0 |
|
2. Availability to pulp and paper industry |
3.6 |
4.2 |
4.8 |
|
|
3. Production |
1.0 |
1.2 |
1.4 |
|
|
c) WHEAT STRAW |
||||
|
|
1. Output |
- |
- |
- |
|
2. Availability to pulp and paper industry |
8.3 |
8.7 |
9.1 |
|
|
3. Production |
2.4 |
2.5 |
2.6 |
|
|
d) RECYCLED FIBRE* |
||||
|
|
1. Output |
- |
- |
- |
|
2. Availability to pulp and paper industry |
0.9 |
1.3 |
1.6 |
|
|
3. Production |
0.7 |
1.0 |
1.2 |
|
|
e) IMPORTED PULP |
||||
|
|
1. Output |
- |
- |
- |
|
2. Availability to pulp and paper industry |
0.9 |
0.9 |
0.9 |
|
|
3. Production |
0.7 |
0.7 |
0.7 |
|
|
f) WOOD AND BAMBOO |
||||
|
|
1. Output |
64.0 + |
73.0 + |
82.0 + |
|
2. Availability to pulp and paper industry |
- |
- |
- |
|
|
3. Production |
1.4 |
1.2 |
1.2 |
|
|
Estimated total production of paper and newsprint |
4.1 |
5.0 |
6.1 |
|
|
TOTAL PRODUCTION OF FIBRE |
7.3 |
8.2 |
9.7 |
|
*Chiefly domestic and imported waste paper
**Wood and bamboo
Taking these imperatives into consideration, the likely pattern of utilization of raw material through 2010 is foreseen as follows Fig.4 and Table 34.
Table 34
|
Raw material source |
Likely production of paper, paperboards and newsprint (million tonnes) |
% Shares |
|||||
|
2000 |
2005 |
2010 |
2000 |
2005 |
2010 |
||
|
Non wood fibre sources* |
1.3 |
2.1 |
3.0 |
32 |
42 |
49 |
|
|
|
Bagasse |
1.1 |
1.6 |
2.2 |
|
|
|
|
Others** |
0.2 |
0.5 |
0.8 |
|
|
|
|
|
Recycled fibre |
0.7 |
1.0 |
1.2 |
17 |
20 |
20 |
|
|
Imported pulp |
0.7 |
0.7 |
0.7 |
17 |
14 |
11 |
|
|
Wood and bamboo |
1.4 |
1.2 |
1.2 |
34 |
24 |
20 |
|
|
Total |
4.1 |
5.0 |
6.1 |
100 |
100 |
100 |
|
*Bamboo not included
**Chiefly cereal straw and other assorted residues in small quantities;
%'ges by editor.
Figure 4 - Likely Pattern of Raw Material Utilization - Pulp and Paper
2000
2005
2010
The contribution of non wood fibre sources is foreseen to be limited, despite availability and technical suitability of the same. The sector will largely depend on wood from forest to some extent, and farms mostly. It is possible that a few units will enter into tie up arrangements with farmers. The plywood segment will continue to import logs to supplement supplies from forests (including old plantations of teak), coffee and tea plantations, rubberwood obtained from slaughter felling of rubber trees will emerge as a dominant source.
By 2010, non wood sources will make some contribution, i.e., bamboo in plywood; cotton stalk, bagasse and straw in fibreboard; rice husk and groundnut husk in particleboard. Their share in production, taking an optimistic view, is given in Table 35.
Table 35 - Likely share of non wood sources in production of panels
|
|
2000 |
2005 |
2010 |
||||
|
(1) |
(2) |
(1) |
(2) |
(1) |
(2) |
||
|
1.
|
Plywood (million cu.m) |
0.73 |
|
0.85 |
|
0.96 |
|
|
Bamboo (million tonnes) |
|
0.02 |
|
0.04 |
|
0.07 |
|
|
2.
|
Particleboard (million tonnes) |
0.13 |
|
0.18 |
|
0.25 |
|
|
Bagasse (tonnes) |
|
19,600 |
|
27,000 |
|
38,000 |
|
|
Cotton stalk (tonnes) |
|
8,800 |
|
12,000 |
|
17,000 |
|
|
Jute stalk (tonnes) |
|
4,000 |
|
5,600 |
|
8,000 |
|
|
Rice straw (tonnes) |
|
30,000 |
|
41,000 |
|
57,000 |
|
|
Rice husk (tonnes) |
|
6,200 |
|
8,600 |
|
12,000 |
|
|
3.
|
Fibreboard (million tonnes) |
0.089 |
|
0.13 |
|
0.17 |
|
|
Bagasse (tonnes) |
|
2,600 |
|
8,800 |
|
11,600 |
|
|
Cotton stalk (tonnes) |
|
96,000 |
|
140,000 |
|
184,000 |
|
|
Rice straw (tonnes) |
|
34,000 |
|
50,000 |
|
66,000 |
|
(1) = Estimated total production of panels.(2) = Quantity of non-wood raw material likely to be available (but not necessarily used in panel production).
In respect of panels, if Research and Development backstopping is provided and vigorous marketing efforts are undertaken, it will be possible to achieve more contribution from non wood sources. Unless wood supplies are drastically reduced, there is little likelihood of such initiatives and the dominance of wood in the production will continue.
