Paper Industry
-Exploring the new dimension with clean technology.


Since globalisation, the Indian paper industry is growing at a phenomenal rate and has been exposed to global prices, demands and supply trends. But, it still needs to cope with several bottlenecks to compete in the global scenario, with new market, new product and better technology, under increasing regulatory pressure on all around for this segment, in particular.  This industry must, therefore, find new ways to improve environmental and process performance, enhance product quality, and reduce operating costs in a continuous manner. Industry is grappling with the problem of implementing the environment norms as laid down in the Kyoto Protocol of the World Trade Organisation and is being recommended to replace the chlorine-based process of pulp manufacturing activity with Elementary Chlorine Free Technology (ECFT) to ensure hazards-free environment or invite heavy penalty.  On this situation, Indian paper industry has a 1:1 correlation with the economy of our country i.e. the expected GDP growth of 7-8%, the paper sector is expected to record a similar growth rate in the years to come.

The demand for paper in India is rising by nearly 7% every year. In 2000, the paper consumption in India amounted to some 4.2 million tons; by 2010 it will have reached 8 million tons. In other words: the annual per-capita consumption of approximately 4 kg at the end of the last millennium will have grown to nearly 7 kg by 2010.Though the Indian paper mills are gearing up to meet the projected demand of 8.5 million tonnes by 2010 and 10.8 million tonnes by 2015, they are also looking for technologies for both upgradation and modernisation to keep pace with the demand.  Gujarat, the leading industrially developed state has also identified this industry as one of the focus sector for its growth and to attract new investment in the years to come in WTO regime.

Today, Indian Paper Industry is the 15th largest in the world and provides employment to over 1.3 million people in the country contributing Rs.25 billion worth revenue to the government.  The industry has recorded a volume growth of CAGR of 5.47% over the last 3 years.  In 2003-04, it recorded a volume growth of 6%, in line with the GDP growth.  Since then it is growing in all the parameters of Growth as stated below-
Growth of

PAPER INDUSTRIES IN INDIA

Source: CMIE, Economic Intelligence Service, February 2006

However, in the area of News Print, growth is found to be negligible in the country. In the world scenario, pulp prices increased sharply in 2004 on account of increased demand from US and China resulting in an increase of about 5% on an average in the domestic paper prices in India.
Paper Production and Consumption in India
vis-à-vis other countries

*Excluding newsprint.

Japan is the largest producer having maximum per capita consumption.  In that context, India is having the lower per capita consumption and even with increase of 1 kg per capita consumption demand will increase by 1 million tonnes. India exported paper worth US $805.88 million in the year 2004-05 with a growth of 56.33% than previous year.  Indian Paper Industry may be outlined as follows:-

* Most of them are small in size. Only 34 mills are of capacity over
    3300 tons/annum.
** India contributes barely 1.6 % to the global paper production of
     330 million tonnes

In Gujarat, there are over 100 paper industries with a production capacity of 10.50 lakh metric tonnes in Gujarat.  It employs over 1 lakh people in the state.  However, there were 111 paper projects in medium and large sector are commissioned in Gujarat with an investment of Rs. 1528 crores.  Another 51 Projects worth Rs.662 crore are in the process of implementation.  However, the state constitutes only about 3% share of paper production in the country as stated below and, therefore, lot many is yet to be done to attract new investment in the state.

Paper Production April 2005 – March 2006

Source: -CMIE

During 2005-06, the state illustrated a fall of 13.57% producing 59,857 tonnes, thereby contributing 2.8% in total country’s production.  Making an inter-state comparison, it shows that Andhra Pradesh led the sector by producing 5.36 lakh tonnes and thus contributed 25.02% to total country’s production.  Tamil Nadu and Maharashtra followed the trend by contributing 17.30 and 12.19% respectively to the total all-India’s production. Total paper production in the country was 21.37 lakh tonnes.  But, looking to the on-going economic development in a faster space, having the largest coastline, the state has the advantage for setting new projects, based on recycled paper waste, with cleaner technology, importing from abroad.

Paper and Pulp Industries (MLI*) in Gujarat

*MLI = Medium & Large Industries

The demand for paper is influenced by various macro-economic factors like national economic growth, industrial production, promotional expenditure, population growth and the Government’s allocation for the educational sector.  There are, at present, about 515 units engaged in the manufacture of paper and paperboards. The country is almost self-sufficient in manufacture of most varieties of paper and paperboards. Import, however, is confined only to certain specialty papers. To meet part of its raw material needs the industry has to rely on imported wood pulp and waste paper. The production of paper & paperboard during the year 2004-2005(upto Dec., 2004) is 28.49 lakh tonnes.  Capacity expansions (which cost 50% less than new capacities) have been announced by most players of Paper industry and in the recent past and as stated below:

Capacity and ongoing expansion of 7 leading players       (Tons)

Average capacity utilization of major players has also been picked up and in the tune of 99% in 2004.

Source: IPMA

As per the Reserve Bank Report, based on the Sanctioned projects by various Financial Institutions there is an constant growth of Investment for Indian Paper Industry for the last three years as stated below-
Growth in Capital Investment in
Private Paper Industry

Paper Industry is again a highly Power intensive industry. Captive power is, therefore, an integral part of a paper manufacturing facility in the organized sector and requires an investment of Rs30-40mn per MW. Captive power is 1.5 to 3 times cheaper than Grid power and could result into annual savings of about Rs10mn/MW. Most players in this industry have captive power generation facilities. Though rising coal prices and availability of coal are key areas of concern in a place like Gujarat one can take advantage of available Gas as cleaner and cheaper fuel for Power generation or gor for imported coal from Australia or China.

Most of the organized players are planning to expand their reach to the international markets by trying to adhere to the global standards and improving the quality of paper. The Indian paper industry is facing competition from imported paper, and the Indian firms are working on ways to become globally competitive. Adoption of clean technology is being considered as one of the way to be competitive. Although the potential for cleaner technology is high in India, it is still in the nascent stage.

In the pulp and paper-manufacturing sector, clean technology will have a high demand in the years to come which include Process and technology like, anaerobic treatment, lignin recovery, use of fly-ash generated in industry for brick making, continuous digestion system for pulping section, rapid displacement heating pulping technology, sulfonated pulping technology, chemical recovery systems, total chlorine-free bleaching system, extended dezincification process, black liquor gasification, sensors and process control ,closed effluent systems and others.

The market for clean technology in India is expected to grow steadily as this would be adopted by industries as an effective tool to improve competitiveness, while meeting the most stringent pollution control regulations. Besides Environmental impacts, major concerns in the process of development of Paper Industry are Raw Material Constraint and High Energy use.

The use of raw materials in India, one can categorize three types of mills: forest based mills; agro waste/residue based mills and recycled fibre-based mills.   Forest based raw materials account for about 50% of total raw material inputs for paper, paperboard and newsprint production, while the share of agricultural residues and wastepaper amount to 30% and 20% respectively. 

Pulp and paper production is highly energy intensive with 75-85% of the energy requirement being used as process heat and 15-25% as electrical power. The combination of these two energy requirements qualifies paper production for the use of co-generation (low pressure steam for process heat and high pressure steam for electricity generation). 

Finally, this is a highly chemical process industry with major impact on the environment. The potential pollutants from a pulp and paper mill can be classified into four categories: (1) liquid effluents, (2) air pollutants, (3) solid wastes and (4) noise pollution. The environmental problems faced by large and small paper mills are entirely different. Pollution control is more difficult for small and medium size agro-based units. Sometime, Chemical recovery in these units is not economically viable and therefore black liquor tpd lime sludge is not being burned for heat recovery. It is estimated that a 30-tpd small paper mill can be almost three times as polluting as an integrated paper mill of 200 tpd.

Government of Gujarat has the highest priority for environmental protection along with Industrial development in the state.  The state is active for improvement in environmental quality, creation of common facilities for effluent treatment, introduction of cleaner production process, plantation in industrial areas and encouraging environment management system in industrial units and clusters.

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