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 a vital role in the overall industrial growth and also provides a necessary medium to propel our knowledge based economy forward in the new millennium. The Planning Commission has therefore taken up an exercise to prepare a well defined path for the development of the paper industry in the context of the overall objective of inclusive national growth. A Working group on Pulp and Paper sector was accordingly constituted for the task of reviewing the progress made by the industry in the previous plan period (2007-2012) and for suggesting suitable 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 in demand for paper in the country will require considerable increase in the indigenous production base of the paper sector in the next fifteen years. Clearly, this would require in-depth planning to address critical issues such as nonavailability of fibrous resource, trained manpower, high input costs, technological obsolescence and lack of economies of scale. In order to examine these issues in detail specific Sub-Groups were formed under the aegis of the Working Group to come out with recommendations in the areas of Raw Materials, Recycled / Waste Paper, Technology, Energy & Environment and Human Resource Development. 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 by the chairpersons and members of the different Sub-Groups in the preparation of this report. I believe the report would help the policy makers significantly in framing the guidelines for the growth of the paper sector during the 12th five year plan.

(P.K. CHAUDHERY)

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 1. Shri R.P. Singh, IAS, Shri M.C Singhi, Designation & Organization Secretary, Industrial Policy and Promotion, Ministry of Commerce & Industry- Chairman Senior Economic Advisor,Industrial Policy and Promotion, Ministry of Commerce & Industry Joint Secretary, Industrial Policy and Promotion, Ministry of Commerce & Industry Economic Advisor, Industrial Policy and Promotion Ministry of Commerce & Industry Joint Advisor, Planning Commission

2.

3.

Shri Talleen Kumar, IAS Shri U.K. Kalra

4.

5.

Shri D. Banerjee

6.

Shri S.S. Das

Additional Economic Advisor, Industrial Policy and Promotion, Ministry of Commerce & Industry Director, Industrial Policy and Promotion Ministry of Commerce & Industry Director, Central Pulp & Paper Research Institute, Director, ITC Ltd.,

7.

Shri P. Biswas,

8.

Dr. R M Mathur

9.

Shri Pradeep Dhoble Shri MVN Rao

10.

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.

14.

Shri Yogesh Agarwal Shri S.K. Singh

Ballarpur Industries Ltd.

15.

Ministry of Heavy Industries

16.

Shri R.C. Rastogi

CMD, Khatema Fibers Ltd, & President Indian Recycled Paper Makers Association Secretary General, Indian Newsprint Manufacturers Assocation Secretary General, Indian Agro and Recycled Paper Mills Association Assistant Director, FICCI

17.

Shri R. Vijay Kumar

18.

Shri P.G. Mukundan, Ms. Nisha Goel

19.

20.

Ms. P.L. Ahujarai

Director, Ministry of Environment & Forests

21.

Shri Dharmendra Prakash Prof. A.K. Ray

Joint Development Commissioner, Ministry of Small & Medium Enterprises Indian Institute of Technology, Roorkee

22.

23.

Dr. Sanjay Naithani

Indian Council of Forestery Research, Dehradun

24.

Dr. R K Jain

Central Pulp & Paper Research Institute

25.

Mrs. Rita Tandon

Central Pulp & Paper Research Institute

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

Sub- committee on Raw Material (Group-I) for wood based paper industry
S.No. Name 1. Shri R. K. Goel, IFS Designation & Organization IG, Forests, Ministry of Environment & Forest, Government of India Chairman DIG Forests , Ministry of Environment & Forest, Govt of India AIG, National Forest Policy, Ministry Environment & Forest, Government of India AIG, Forest Conservation, Ministry Environment & Forest, Government of India Executive Adviser Emami Papers Ltd., Kolkata of of

2.

Shri A. M. Singh, IFS

3. 4.

Shri H.C.Chaudhary Shri Harish Chaudhary,

5.

Shri R C Mall,

6.

Shri Sajjan Bhajanka

President Federation of Indian Plywood & Panel Industries & MD, Century Plyboard (I) Ltd. CEO & ED, Shreyans Industries Ltd.

7.

Shri Anil Kumar

8.

Dr. R. M. Mathur

Director, Central Pulp & Paper Research Institute

9.

Sh. Piare Lal

Secretary General, Agro Forestry Association, Phagwara, (Punjab) Vice President ( Plantation ), ITC Limited

Farmers

10

Dr. H. D. Kulkarni,

11.

Shri. J K Jain

Chief Forest Officer, International Paper

12.

Dr. R. K. Jain

Scientist, Central Pulp & Paper Research Institute Scientist, Central Pulp & Paper Research Institute

13.

Dr. Vimlesh Bist

Sub- committee on Raw Material (Group-II) for Agro based paper industry
S.No. Name 1. Sh. R C Mall Designation & Organization Executive Adviser, Chairman Emami Papers Ltd.

2.

Sh. Anil Kumar

ED&CEO, Shreyans Industries Ltd.

3.

Dr. R M Mathur

Director, Institute,

Central

Pulp

&

Paper

Research

4.

Sh. Pawan Agarwal

5.

Dr. H D Kulkarni

MD, Naini Tissues Ltd., & President, Kumaon Garhwal Chamber of Commerce & Industries, (UK) Vice President (Plantation), ITC Ltd.

6.

Sh. N Narayanamoorthy

Secretary General, Association

Indian

Paper

Makers

7.

Dr. Vimlesh Bisht

Scientist, Central Pulp & Paper Research Institute Scientist, Central Pulp & Paper Research Institute

8.

Dr. R K Jain

Sub- committee on Waste Paper based paper industry

S.No. Name Sh. R C Rastogi Sh. P G Mukundan Designation & Organization President, Indian Recycled Paper Mills Association & CMD, Khatema Fibres Ltd. Secretary General, Indian Agro and Recycled Paper Makers Association ITC. Ltd.

1 2 3. 4. 5. 6

Sh. B V S. Joga Rao

Sh. Vijay Kumar

Secretary, Indian Association

Newsprint

Manufacturers

Dr. R M Mathur

Director, Central Pulp & Paper Research Institute

Smt. Rita Tandon

Scientist, Central Pulp & Paper Research Institute

Sub- committee on Energy, Environment & Technology

S.No. 1. 2. 3. 4. 5. 6. 7. 8. Name Shri R.R.Vaderah Shri Pradeep Dhobale Shri K.S.Kasiviswanathan Shri Madhukar Mishra Shri Arun G Bijur Shri Anil Kumar Dr. Suresh Panwar Dr.B.P.Thapliyal Designation & Organization Managing Director, BILT Ltd Chairman Director, ITC Ltd Managing Director, SPB Ltd Managing Director, Star Paper Mills Ltd Managing Director , SPB PC Ltd CEO & ED Shreyans Industries Ltd Scientist, Central Pulp & Paper Research Institute Scientist, Central Pulp & Paper Research Institute

Sub- committee on Human Resource Development

S.No. 1 2 3 4 5 6 Name Sh. Madhukar Mishra Sh. O. P. Goyal Sh. Anil Kumar Brig. S. K. Mutreja Dr. Vimlesh Bisht Dr. R K Jain Designation & Organization President (IPMA) & MD, Star Paper Mill Chairman Wholetime Director, J K Papers Limited Vice-President (IARPMA) & CEO & ED, Shreyans Industries Ltd CMD, Nepa Papers Ltd. Scientist, Central Pulp & Paper Research Institute Scientist, Central Pulp & Paper Research Institute

CONTENTS
ListofTables................................................................................................................... i ListofFigures................................................................................................................. ii ListofAbbreviations....................................................................................................... iii

Chapter1CurrentStatus&FutureOutlookoftheIndianpaperindustry
1.1 Introduction........................................................................................................ 1.2 StatusofIndianPaperIndustryvisvisGlobalmajorpaperproducingcountries 1.3 ProtersFiveForcesanalysisofIndianPaperIndustry........................................ 1.4 StructureofIndianPaperIndustry...................................................................... 1.4.1 RawMaterialConsumptionPattern 1.4.2 VarietywiseproductionfromdifferentsegmentsofIndianPaperIndustry 1.5 ProspectsofPaperIndustryConsumption&Production.... 1.6 ScenarioofExport/Importofpaper/paperboardandnewsprint....................... 1 3 5 7 7 8 9 12

Chapter2StatusofRawMaterialsusedbyIndianpaperindustry
2.1 Woodbasedmills................................................................................................. 2.2 Agrobasedmills................................................................................................... 2.2.1 Presentstatusofbagasseproductioninthecountryandits availabilitytopaperindustry 2.2.2 Presentstatusofwheatstrawproductioninthecountryandits availabilitytopaperindustry.. 2.3 WastePaperbasedmills...................................................................................... 2.3.1 Currentstatusofwastepaperutilization 2.3.2 FutureOutlook..................................................................................

14 14 15 15 16 17 17

Chapter3Strategiesforachievingtheenvisagedgrowth:Constraints andThewayforward
3.1 Majorconstraints................................................................................................. 3.2 Strategiesrequiredtoachieveenvisagedgrowth................................................

20 22

Chapter4Technology&Innovation
4.1 Technologyinterventiontoachievetheprojectedgrowthrate........................... 4.2 TechnologyinterventiontoaddresstheenvironmentalIssues............................ 4.3 Strengtheningofcapabilitiesforindigenousmachinerymanufacturingfacilities 4.4 StrengtheningofR&Dsupport............................................................................

25 25 28 28

Chapter5HumanResourceDevelopment
5.1Currentstatusonavailabilityofprocessstreamtechnicalmanpowerforpulp& paperindustry...................................................................................................... 5.2 Quantumoftechnicalmanpowerexistingintheindustry.................................. 5.3 Requirementoftechnicalmanpowerinfuturebytheindustry.......................... 5.3.1 Skilledmanpowerrequirementinpulp&papersectorfor12thplanon longtermbasis 5.4 Existinginstitutionsimpartingvariouscoursesintheareaofpulp&paperinthe country..................................................................................................................... 5.5 Gapbetweenrequirement&availabilityofprocessstreamtechnicalmanpower.. 5.6 Milestonestobeachieved................................................................................... 5.7 DetailsofbudgetforHRD.................................................................................... 5.7.1 StrengtheningofITIsforstartingcertificatecourse......................... 5.7.2 Upgradationoffacilitiesofhigherlevelinstitutions......................... 5.7.3 StrengtheningofCPPRIintheareaofHRD&training...................... 29 29 29 30 31 32 33 33 33 34 34

Chapter6Fiscal&Tradepolicyrelatedissues
6.1 CustomsDuty..................................................................................................... 6.2 AssistancetoForestry/Plantation 6.3 CENVAT/GST 6.4 CreationofTechnologyUpgradationFund(TUF) 6.5 DirectTaxes. 6.6 ImportPolicy..

35 36 36 36 37 38

Chapter7FlowofResources&Budgetaryrequirements
A.) FlowofResourcesfor12 Fiveyearplan.. 7.1 Financesforimprovingtherawmaterialbase&quality................................... 7.1.1 Wood...................................................................................... 7.1.2 Agroresidues................................................................................... 7.2 Modernization&expansionofexistingmills..................................................... 7.2.1 Woodbasedmills............................................................................. 7.2.2 Agrobasedmills............................................................................... 7.2.3 Recycled/wastepaperbasedmills................................................... B.) Budgetaryrequirementforthe12thFiveyearplan...........................................
th

39 39 39 39 40 40 40 41 43 Chapter 8 Recommendations of the Working Group on Pulp & Paper 45 Industry Chapter9PrintingIndustry 51

Annexures
AnnexureIMinutesoftheFirstmeetingofWorkingGrouponPulp&Paper Industryheldon30.05.2011.............................................................. AnnexureIITermsofReferenceofSubCommitteesonRawmaterial................. AnnexureIIITermsofReferenceofSubCommitteesonWastePaper................. AnnexureIVTermsofReferenceofSubCommitteesonTechnology,Energy& Environment.......................................................................................... AnnexureVTermsofReferenceofSubCommitteesonHumanResource Development......................................................................................... AnnexureVIBusinessModelsforraisingplantation... AnnexureVIIListofTechnologicalinterventions. AnnexureVIIIMinutesofMeetingofWorkingGrouponPaperheldon29.08.11 AnnexureIXMinutesofMeetingheldon28.09..11. iv xiv xvi xvii xix xx xiv xxvii xxxiii

CHAPTER 1 CURRENT STATUS AND FUTURE OUTLOOK OF THE INDIAN PAPER INDUSTRY

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 the traditional 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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Fig.1 Road Map of Indian Paper Industry

Custom duty 25% Excise duty rationalized at 16% Production- 42 Lacs tpa

20 2003
Production 10.1 1 millionTonnes

2001 2000

Growth R 4.8 %

world-wide recession eases

Oversupply leading to plant closures.

1993
Demand grows to 36 lacs

1983 1991
325 mills. Demand supply situation improves installed capacity 33.04 lac t

55 Mills - capacity 7.68 lac tons

1971 1981 1951

Use of bamboo - rapid growth in the Industry.

1914

137 mills -capacity 18.16 lac ton

17 mills- capacity 1.37 lac ton

1832

First mill on imported wood

Source: CPPRI

After independence the country faced a major challenge of marshalling all the available 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 July, 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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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 Japan 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 edge technologies 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 production of paper/paperboard & technologies used by Worlds leading manufacturers and status of Indian mills.
World Varieties of Paper World Production, million tons/ year (2010) 110 Worlds Leading manufactu - rers Cutting Edge Technologies Used Indias Production, million tons/year (2010) 3.90 No. of Mills India No. of Mills Using Advanced Technology Status of technology in Indian mills

Printing+ Writing/ Coated/ Uncoated Wood free Paper

USA Germany Brazil Indonesia Turkey China Italy Japan Finland

Proficient debarking and chipping systems Low kappa pulping, Efficient Washing, screening & centricleaning ECF & TCF Bleaching Efficient chemical recovery Modern high speed paper machines

146 (19 wood based mills, 49 agro based & 83 RCF based mills)

5 wood based mills and 3 agro based mills.

Packaging/ Wrapping/ other Papers

222

USA Turkey China Germany Italy Australia Sweden Finland

Low kappa pulping Efficient Washing and chemical recovery Modern high speed paper machines

5.41

444 (3 wood based mills, 101 agro based mills, 340 RCF based mills)

3 wood based mills, 6 RCF based mills

Newsprint

34

Canada China Japan USA Germany

High yield pulping Efficient Washing Modern high speed paper machines with super-calenders

0.79

112 (2 wood based, 110 RCF based)

2 wood based mills, 10 RCF based mills

Low kappa pulping, ECF bleaching, Efficient washing, screening , cleaning and chemical recovery systems in 5 wood based mills. Drum pulpers and efficient deinking systems in 3 RCF based mills. Only 3 mills have paper machines above 1000 m/min speed. Low kappa pulping, efficient washing, screening, cleaning and chemical recovery systems in 3 wood based mills. Drum pulpers and pulp screening and cleaning systems in 6 RCF based mills. CTMP and CSRMP pulping in 2 wood based mills. Hi consistency pulpers and deinking systems in 6 RCF based mills. 4 High speed machines with calenders.

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CHAPTER 2 STATUS OF RAW MATERIALS USED BY INDIAN PAPER INDUSTRY

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 through farm/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 based industries 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 mushroom production, 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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Household & Sanitary Paper

28

USA China Japan Italy Turkey

Low kappa pulping Efficient Washing, screening & cleaning Modern stock preparation and additive systems. Modern tissue paper machines

0.10

7 (2 wood based and 5 RCF based mills)

2 wood based mill

2 modern paper machines in wood based mills

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 of factors 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 profit potential. 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

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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 being manufactured. 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 newsprint and 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 BarriertoEntrants

Highcapitalcost(+) LowROI(+) Rawmaterialscarcity(+) Trainedmanpower(+)

Rawmaterials() (wood/bagasse,straws/ wastepaper) Trainedmanpower() Coal/Gas() Importedtechnology(+)

Suppliers

No.ofgradeshaving distinctuses(+) Highswitchingcost(+) Exitbarrier()

Rivalry

Govt.PurchaseforRTE(+) Growingpercapitaincome (+) Dutyfreenewsprint(+) Customerchoice()

Buyers

Substitutes
email/computerisation() ebooks/enewspapers() Importofprintedbooks() Electronicmedia()

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. 7|

Fig. 4 Structure of Indian Paper Industry

47% 47% 30 % 7% 9% 84%

39% 31% 22 22 % %

31%
1970 Forestbased 2000 RecycledFiber 2011 Agrobased

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.)

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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 different raw materials (2010-11) (million tons) Variety of Wood based Agro RCF/Waste Total paper based paper based Writing/printing Packaging Newsprint Grand Total 2.36 0.77 0.03 3.16 0.73 1.50 Nil 2.23 0.81 3.15 0.76 4.72 3.90 5.42 0.79 10.11
Source: Industry & CPPRI

Fig. 5 Variety wise production of paper from different segments of Indian paper industry

Source: Industry

1.5 Prospects of Paper Industry- Consumption & 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 used as 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 each successive 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 to internet 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 Consumption of Paper (Million Tons) Writing Packaging News Print Total paper Paper consumption 4.0 5.4 1.7 11.2 4.3 5.9 1.8 12.0 4.6 6.4 1.9 13.0 5.0 7.1 2.1 14.2 5.4 7.8 2.2 15.4 5.8 8.6 2.4 16.8 6.3 9.4 2.6 18.4 9.3 15.2 3.9 28.4 11.8 20.2 4.9 36.9 13.8 24.5 5.7 43.9

2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2021-22 2024-25 2026-27

Baseline Scenario 11.2 12.1 13.0 13.8 14.7 15.6 16.5 21.8 23.5 25.3

Overall 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.

10 |

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 are assumed 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: 4 Projected Production of Paper (Million tons) Wood Agro Based Recycled Total Resources resources Paper Production 3.2 2.2 4.7 10.1 3.4 2.3 5.1 10.9 3.7 2.5 5.7 11.8 4.0 2.7 6.2 12.9 4.3 2.9 6.8 14.1 4.6 3.2 7.5 15.3 5.0 3.4 8.3 16.7 8.0 5.4 14.7 28.0 9.3 6.3 17.8 33.4 10.8 7.4 21.5 39.7

2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2022-23 2024-25 2026-27

Baseline production 10.1 10.9 11.7 12.5 13.3 14.1 14.8 19.6 22.0 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.

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

11 |

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 country imports 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.

12 |

Table. 5
Export & Import of Paper, Paper Board & Newsprint, million tons
Particulars 200102 200203 200304 200405 200506 200607 200708 200809 200910 201011

Paper/paper board Newsprint Total Export Paper/paper board Newsprint

EXPORT

0.18

0.22

0.23

0.28

0.304

0.339

0.325

0.334

0.369

0.518

EXPORT

0.001

0.006

0.003

0.005

0.008

0.004

0.004

0.006

0.013

0.009

0.181

0.226

0.233

0.285

0.312

0.343

0.329

0.340

0.382

0.527

IMPORT

0.11

0.15

0.24

0.19

0.291

0.348

0.451

0.437

0.614

0.632

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) Total Imports Domestic Consumption Consumption 11.2 1.0 10.1 12.0 1.1 10.9 13.0 1.2 11.8 14.2 1.3 12.9 15.4 1.4 14.1 16.8 1.5 15.3 18.4 1.7 16.7 31.0 2.9 28.0 36.9 3.5 33.4 43.9 4.3 39.7

2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2022-23 2024-25 2026-27

13 |

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 Availability 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 cogeneration due to incentives being provided by the government for nonconventional 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 major contributor, 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.

15 |

Table. 7 Availability of Agro based raw materials (million tons/annum) Jute/ Total Kenaf 3.0 242.9 0.5 21.8
Source: Industry

S. No. 1 2

Particulars Gross Availability Net Availability

Bagasse 53.0 5.2

Wheat Straw 115 2.6

Rice Straw 58.0 16.0

2.3 Waste Paper Based Mills

(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 to meet 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 of RCF/waste paper
Million tons 1 Indigenously recovered waste paper (27% of total consumption) Waste paper import TOTAL 3.0 % Share 43

4.0 7.0

57 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.

16 |

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 industry
The 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 0.81 3.15 Current import Current Consumption Production by 2025

1 2

Writing Printing Packaging (Duplex Board & Kraft) Newsprint Total

7 9

0.81 3.15

1.9 8.2

6 7.8

0.76 4.72

0.95 0.95

1.71 5.67

1.6 11.7

Source: Industry

17 |

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 the additional 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)
2011-12 Total Paper & Paperboard consumption (at average growth rate of 7.8%) Production through RCF/WP Waste Paper requirement to meet the production Indigenously recovered waste paper (at 27% recovery rate) Waste paper import Share of Indigenous & Imported waste paper 12.0 2012-13 12.9 Year 2013-14 13.8 2014-15 14.6 2015-16 15.5

5.1 6.8 3.2 3.6

5.5 7.3 3.5 3.8

5.8 7.7 3.7 4.0 48%:52%

6.2 8.2 3.9 4.3

6.6 8.7 4.2 4.5

Source: Industry

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

18 |

CHAPTER 3
STRATEGIES FOR ACHIEVING THE ENVISAGED GROWTH: CONSTRAINTS & THE WAY FORWARD

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 Wood Based Mills (i) Raw material Acute and growing shortage of pulpwood compared Availability 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 Mills 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 20 |

(ii)

Scenario-2 - Projected demand of waste paper for next five years, if the indigenous 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)
2011-12 Total Paper & Paperboard consumption (at average growth rate of 7.8%) Production through RCF/WP Waste Paper requirement to meet the production Indigenously recovered waste paper (at 50% recovery rate) Waste paper import Share of Indigenous & Imported waste paper 12.0 2012-13 12.9 Year 2013-14 13.8 2014-15 14.6 2015-16 15.5

5.1 6.8 6.0 0.8

5.5 7.3 6.4 0.9

5.8 7.7 6.9 0.8 89%:11%

6.2 8.2 7.3 0.9

6.6 8.7 7.7 1.0

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.

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

19 |

(ii)

(iii)

(iv)

(v)

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 in poor 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 High Cost of The Indian paper industry uses 20% more raw basic Inputs material; about 30% more energy, 200% more viz. raw water & 10% more chemicals as compared to a material, modern European mill. energy, Need for quantifiable increase in productivity, chemicals etc. quality improvement with reduced cost, improvement in energy efficiency and better compliance with environmental protection legislation, safeguards for eco-sustainability of products etc. Scale of Obsolescence of technologies in most of the mills operation/ Non-availability of tailor made technologies suitable adoption of for prevalent scale of operations in Indian state-of-art conditions technologies Imported origin and high capital investment of the cutting edge technologies to achieve the envisaged growth Environmental Requirement of high capital investment in fiber Compliance 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 Lack of Skilled Lack of adequate infrastructure or facilities / Manpower training centre or courses to provide skilled manpower for pulp and paper sector

21 |

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.13 Strategic structured plan for addressing the issues Target /Goal Intervention Sustained Wood supply of raw Large scale promotion of agro-forestry plantations integrated with wood based industries and addressing the material base 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

22 |

Capacity addition

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. 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 and others ) 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. Policy intervention for allocation of coal for industries located in different parts of the country. Ensuring improved availability & quality of coal at reasonable cost 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 energy efficient systems at generation, distribution and consumption levels. Improved automation and control Development of suitable technologies by way of scaling down the technologies to required level of agro & RCF based mills.

Energy related issues

Technology intervention for improved Energy Efficiency

23 |

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 Energy Sector to Industry 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 Printing Industry to 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 lower custom 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

24 |

CHAPTER 4 TECHNOLOGY & INNOVATION

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 achieve the 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

25 |

The technological interventions needed to address these environmental issues are summarised as under Table.14 Technology interventions for at source reduction Technology Major Technology Inputs Additional Benefits Measures Continuous Digester Reduction in Energy (a) At Source consumption Reduction Reduction in Water Consumption Less cooking time Improved pulp quality Reduced air emission (mercaptans) Screw Press ( for agro based Improved black liquor extraction mills) leading to improved chemical recovery efficiency Oxygen delignification Reduced pollution load Increased reuse and recycling of back water New Generation Pulp Reduced COD Carry over Washers Reduction in Water Consumption Reduced chemical consumption in subsequent bleaching stage Improved black liquor solids concentration leading to improved energy efficiency (specially in agro based mills) High Consistency Pulper ( Reduction in Water Consumption RCF based Mills) Improved pulp quality Less pulping time Elemental Chlorine free bleaching Reduced pollution load including AOX Increased reuse and recycling of back water Reduction in Water Consumption Less Energy consumption Improved washing Efficient black liquor management 26 |

New Generation Showers on Paper Machine Chemical recovery system for agro based mills

Fiber recovery units like poly disc filters etc

b.) End of Pipe Treatment Measures

ETP Up gradation using combination of diffused aeration and surface aerators Membrane Filtration ( Ultrafiltration & Reverse Osmosis)

Reduction in suspended solids Resource conservation Improved reuse and recycling of back water Improved ETP Performance

Removal of colour , TDS & suspended solids Increased reuse and recycle of mill effluent Activated carbon/ pressure Removal of colour , sand filter Increased reuse and recycle of mill effluent Recovery of fillers and other Resource conservation organic and inorganic salts Improved mill economics from waste water Increased reuse and recycle of mill effluent Efficient sludge dewatering Solid waste minimisation system Sludge Incineration System Energy recovery Prevention of contamination of ground / surface water Solid waste minimisation

Scientific land filling / land application Conversion to value added products

Solid waste minimisation/ economic benefits

27 |

4.3

Strengthening of capabilities 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 is very high because of the high cost of imported technologies. The major technology suppliers are located in Europe, Japan 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 the Indian context.

28 |

CHAPTER 5
HUMAN RESOURCE DEVELOPMENT

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 largely on 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 29 |

(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 Additional manpower required by the Indian paper industry
Total Technical Manpower requirement 2012
(Beginning of 12th plan)

Process stream 2012

(Beginning of 12th plan)

Non-process stream 2027 2012

(Beginning of 12th plan)

2017
(end of 12th plan)

2022

2027

2017
(end of 12th plan)

2022

2017
(end of 12th plan)

2022

2027

3570

4680

6135

8040

1428

1872

2454

3216

2142

2808

3681

4824

Source: Industry/CPPRI

5.3.1 Skilled 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 6135 920 1534 3681

2027 8040 1206 2010 4824

Total Graduate Engg. Diploma holder ITIs

3570 535 890 2145

4680 702 1170 2808

Source: Industry/CPPRI

The distribution of the process & non-process stream technical manpower required by the Industry in the ratio of 40% to 60% is given in the table below

30 |

Table.17 Process stream technical manpower required by the Indian paper industry
YEAR 2012
(Beginning of 12th plan)

2017 (end of 12th plan Process Stream 281 Nonprocess stream 421 ProCess Stream 368

2022

2027

Process Stream Graduate Engg. 214

Nonprocess stream 321

Nonprocess stream 552

Process Stream 483

Nonprocess stream 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

Source: Industry/CPPRI

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.

31 |

Table.18 Institutions imparting training in the area of pulp & paper S. No. Name of Course 1. 2. B.Tech in Pulp & Paper (Four years) B.Tech in Pulp & Paper (Four years) B.Tech in Pulp & Paper (Four years) Univ/ Institution IIT Roorkee Bangurnagar Degree College, Dandeli Laxmi Narayan Institute of Technology Nagpur Forest Research Institute, Dehradun & CPPRI Saharanpur Sant longowal Inst. Longowal,Punjab. Amrawati University (MS) Basic No. of Qualifications seats 10+2 90 10+2 25

3.

10+2

20

4.

M.Sc in Pulp and paper (Two years)

B.Sc

20

5. 6.

7.

B.Tech in Pulp & Paper (Four years) B.Tech in Chemical with specialization in Pulp & Paper (Four years) Diploma in Pulp & Paper (3.5 years)

10+2 10+2

30 10

8. TOTAL

SPB Institute of Technology, Tiruchirapalli Diploma in Pulp and Paper SJP Polytechnic, (Three Years) Yamunanagar

High School

50

High school

71 316

Source: 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. 32 |

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 the course 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 Number in ITIs 25 15 16 56

Year 2011-12 & 2012-13 2014-15 2015-16 Total

Fund required Rs. (In Crore) 32.5 19.5 20.8 72.8

33 |

5.7.2 Upgradation of facilities of higher level institutions

Total number of existing institutions = 8

Table. 20 Funds required for upgradation

Year 2012-14 2014-15 Total funds required in 12th plan Fund required Rs. (In Crore) 5 5 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 = Total budget requirement in 12th plan =

Rs. 4.14 crore Rs. 104.44 crore

34 |

CHAPTER 6 FISCAL AND TRADE POLICY RELATED ISSUES

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 duty works 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 36 |

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 reintroduced in view of the current inflationary trends, the high cost of borrowing capital, and the increase in replacement value of Plant & Machinery. 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%. 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 the following 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 of deduction under U/S 80IA for power generation / distribution should be extended upto 31.03.2020

(ii)

(iii)

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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 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.

(ii)

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CHAPTER 7 FLOW OF RESOURCES & BUDGETARY REQUIREMENTS

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 Target for the 12th Five year plan (2012-17) 3.0 million tons 1.2 million tons

Funds

requirement for 1.2 @Rs.100,000 per annual ton

million

tons Rs.12000 Crore

capacity of 3.0 million tons @Rs.60,000 per Rs.18000 Crore annual ton resulting in production gain of 20% (0.6 million tons) Target for the 13th Five year plan (2017 -22)

Funds requirement for Upgradation of the existing

Requirement of funds for capacity addition of 0.6 Rs.6000 Crore

million tons through Greenfield projects @ Rs. 100,000 per annual tonne Target for the 14th Five year plan (2022 -27)

Requirement for the third period of 5 years @ Rs.6000 Crore

100,000 per annual ton for the balance 0.6 million tons per year will be 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 capacity expansion.

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7.2.3 Recycled/waste paper based mills

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 Growth in demand Demand by 2025 Present domestic production Present import 2.2 million ton 6% 5 million tons 1 million tons 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 is not manufactured in India and it will have to be imported.

Currently the Newsprint industry is not able to compete with international

manufacturers due to various reasons and no addition in the Newsprint capacities are forthcoming or planned in the near future.

This will increase Newsprint import from 1.2 million tpa to around 4 million tpa,
which will cost around Rs.12,600 Crore per annum.

If an additional 3 million ton capacity is set up in India to meet the demand of

Newsprint the total investment (@ Rs.75,000/- per ton of annual capacity) will be Rs.22,500 Crore.

(b)

Duplex Board Present demand of 1.5 million ton will increase to 5 million ton by 2025 with a
growth of 9% per annum.

Investment required for 3.5 million ton capacity (@ Rs.40,000 per ton of
annual capacity) will be Rs.14,000 Crore.

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(c)

Kraft Paper Present demand of 3.5 million ton will increase to 6 million ton by 2025 with a
growth of 8% per annum.

Investment required for setting up of additional 2.5 million ton capacity (@

Rs.25,000 per ton of annual capacity) would be Rs.6,300 Crore. Thus an investment of Rs.42,800 Crore is required for setting up facilities for the manufacture of Newsprint, Duplex Board and Kraft Paper in India to meet the projected demand over the next 15 years Newsprint Duplex Board Kraft Paper Rs.22,500 Crore Rs.14,000 Crore Rs. 6,300 Crore Rs.42,800 Crore

Such a large investment for the paper industry would need long term funding (10 years) at a low rate of interest and also support of equity from Venture Capital Funds.

Total flow of financial resources for 12th Five Year Plan (7.1.1 + 7.2.1 + 7.2.2 + 7.2.3) = Rs. 98,250 crore

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B.
S. No. 1.

Budgetary requirement for the 12th Five Year Plan

Activity Raw material availability Wood based a) Activities related to pre-execution stage of the scheme Restoration/afforerstation of 5,00,000 ha of degraded forest land (@5% of Rs. 2500 Crores) Identification of areas, preparation of DPRs Developing the mean of financing State wise internal approval Establishment of regulatory system in place 125.0 Rs. Crores

Sub Total (1) 2. Agro based Upscaling of efficient depithing process developed by CPPRI in one of the sugar mill site Identification and demonstration system for pre-drying of bagasse for better thermal efficiency Identification & promotion of alternate ligno-cellulosic raw materials for paper making through R&D at CPPRI Total 5% of above as pre-project activities at CPPRI Sub Total (2) 3. Recycled/Waste paper a) Fund allocation for Municipalities in all metros involved in solid waste management including waste paper under a performance based model b) Strengthening of CPPRI capabilities Setting up of integrated pilot plant Upgradation of R&D facilities at CPPRI

125.0 2.0 1.5 2.0 5.5 0.275 5.78 Say 6.0 100.00

18.45 5.00 123.45

Sub Total (3)

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Energy, Environment & Technology 4. R&D support for improved energy efficiency a) Development & adoption of energy efficient technologies Wood based mills Agro based mills RCF mills b) Customization of technology for industry Wood based mills Agro based mills RCF mills Sub Total (4) 5. R&D support for improved environmental compliance Upgradation of R&D facilities at CPPRI to undertake environmental audit, monitoring, provide environmental solutions etc. Conducting R&D studies on various options like tertiary & membrane technologies to reduce effluent load for disposal Demonstration of technology in three mills (wood, agro & RCF based, one in each category)

8.0 10.0 2.0 8.0 5.0 2.0 35.0 6.0

4.0 15.0

Sub Total (5) 6. Human Resource Development Identification & strengthening of 56 no.s ITIs for certificate course in pulp & paper Upgradation & expansion of existing institutions Strengthening of CPPRI in HRD & training Funds to CPPRI (Nodal agency) for pre-project activities @5% of the total budget. Sub Total (6) 7. Printing Industry Strengthening of infrastructure for HRD & Training

25.0 72.8 10.0 17.5 4.14 104.44 30.0

Grand Total (1+2+3+4+5+6+7)

448.89

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CHAPTER 8 RECOMMENDATIONS OF THE WORKING GROUP ON PULP & PAPER INDUSTRY

CHAPTER 8 (A) RAW MATERIALS (I) Wood

1. Suitable strategic interventions and policies have to be devised to facilitate captive growth of trees. Such plantations may be carried out either on degraded forest land or through farm forestry. Forest Development Corporations (FDCs) should be made the nodal agencies for this task, so that they can work in coordination with the paper industry for the execution of the plantation. Together, the two can address the determinants of the scheme such as finances and suitable tree species. This will result in generation of resources for both the FDCs as well as the paper industry. 2. In order to safeguard the interests of the local stake holders (forest dwellers, tribals, rural population) staying inside or at the fringes of such forest areas, a separate modus-operandi should be evolved. This may be based on a Multi Stake Holder Partnership (MSP) model involving local populace, with proper safeguard on the ownership character of land as per the provisions of the Forest Act. The necessary social and economic audit of the MSP needs to be placed under a Regulatory Authority. This MSP can be used as an additional tool to achieve the national social objectives while meeting the raw material requirement projected by the Industry. 3. It is proposed that 2.5 million hectare out of the total 28.84 million hectare of degraded forest land may be harnessed for the forestry program. For this purpose FDCs should involve Paper Industry through an acceptable mechanism as per the existing Forest Policy. The following two modalities are suggested for interaction of Paper Industry & FDCs for entering into agreement (i) FDCs can plant trees on their own. They can raise finance from banks/ financial institutions against a guarantee from the Paper Mills to buy the produce at specified price. FDCs can engage the Paper Mills through an arrangement that enables the mills to undertake the entire aforestation activity including arrangement of finance.

OR (ii)

The choice of option is to be left to individual Mills/FDCs. The working model proposed by the industry is placed as Annexure-VI.

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4. It is also recommended to put in place a policy framework to encourage R & D work in the forestry sector. This may involve work to improve planting stocks, adopt genetically modified clones/plants, improved techniques and processes etc. A system of adopting modern methods in forestry as practiced by advanced countries may also be put in place. The adoption of methodology must aim to increase the growth of bio-mass in various categories of land and should add to the prevalent successful models of agro forestry plantations being practiced in the country. 5. It is observed that the agro forestry and farm forestry efforts made by various stakeholders including forest departments, industries etc. have achieved reasonable success. These programs have contributed significantly towards increasing the green cover, accruing mutual benefits to the farmers and the industry. In view of this, the Committee recommends that the initiative on the Agro forestry should be taken forward with due support of Forest Departments. Policy framework should specifically cover the need to provide financial support to farmers by way of loans on easy and priority terms at par with agricultural loans. This will help in generation of raw material resources for the Industry. More importantly, such an initiative will divert pressure on forestry product from natural forest areas, resulting in ecological conservation. 6. It is proposed that the model prevalent in the sugar sector may be adopted for agro/farm forestry. In this model, the farmers are provided with financial assistance by the industry to raise the plantations. The bank loans for this purpose are drawn by the industry, which is then responsible for its repayment. At the end of the stipulated term (i.e. after harvesting) farmers are paid as per the volume/weight of the produce after deducting the advances paid. 7. To protect the interest of farmers undertaking agro/farm forestry plantations, it is essential to put in place a mechanism for minimum support price and buyback arrangement in order to avoid distress sale at a later stage. Insurance for pulpwood plantation should be provided on same terms and conditions as made available for agricultural crops. 8. As the paper sector is poised for substantial growth during the 12th plan, there will be an increase in demand for wood based fibre. The constraints envisaged in increasing captive plantation will take some time to ease out. Therefore, the government may consider to waive off/reduce customs duty on import of fibre (wood logs/bamboo, wood/bamboo chips, all types of pulp etc.) till the time the proposed Multi Stake Partnership Scheme starts yielding results. In view of the massive potential for developing captive plantations on degraded forest lands (as proposed under the Multi Stake Partnership Scheme) in India,

46 |

imports of all the machines, implements and technology to undertake such projects should be allowed at zero import duty. 10. Benefits arising from agro/farm forestry under mechanism of CDM, REDD+, need to be worked out in a project mode, and passed on to farmers.

(II) Agro Residues (i) Bagasse

11. At present, sugar mills use 80% of bagasse generated during cane crushing for generating energy. Nearly 10-20% surplus Bagasse is used in power generation, which is classified as green energy because it is generated from renewable resources. It is proposed that instead of using Whole Bagasse as fuel, the sugar mills can opt for installation of a dry depithing plant in order to separate its fibrous portion for use in pulp and paper industry. The residual pith fraction, unsuitable for papermaking, can be used as fuel by the sugar mills to meet their in-house requirement of steam & power. It is proposed that a mill scale demonstration plant for efficient depithing of bagasse may be installed in one of the selected sugar mill. 12. Sugar sector uses boilers with obsolete technology in many of its units. As a result, excessive bagasse is being consumed for generation of power and steam. Therefore, financial support is required to be provided to the sugar mills to upgrade their technology level to install efficient high pressure boilers to reduce consumption of bagasse as fuel. This will result in increasing availability bagasse for paper manufacturing. 13. Sugar mills use wet bagasse in their boilers, which reduces their fuel efficiency. There are pre-dryers available that utilize waste flue gases to dry the bagasse prior to its use a fuel. This improves the boiler dynamics and translates in increased availability of surplus bagasse. Demonstration plants based on this technique may be put up in select sugar mills.

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(III) Identification & Promotion of Alternate Renewable LignoCellulosic Raw Materials

14. There is a need to identify and promote alternate ligno-cellulosic raw materials available in enormous quantities in different parts of the country to meet the growing demand of paper. 15. R & D needs to be taken up at CPPRI to identify the suitable alternate fibrous raw materials for paper making. Such fibers may include groundnut shells, areca nut husk, banana fiber etc. These fibers need to be conditioned to partially replace the imported long fiber/indigenous conventional fibres for manufacturing of different varieties of end products. 16. A demonstration desilication plant set up in a mill in Andhra Pradesh is suggested to be scaled up in order to utilize rice straw as an alternate lignocellulosic raw material for the paper industry.

(IV) Recycled Fibre (RCF)/Waste paper

17. There is a need to intensify the collection of Indigenous Waste Paper to increase the present recovery rate from 27% to 50%. It is proposed that Municipalities may work together in association with private operators/industry based on a workable model. For financial support, a performance-based mechanism should be considered. 18. Awareness programmes may be organized to sensitize the public at large. The concept of paper recycling may be promoted using the print and electronic media throughout the country. 19. Eco-labeling of recycled paper products should also be promoted. 20. Efforts are required to enhance quality of recycled end products by strengthening the capability of CPPRI for conducting R&D activities and Pilot plant trials. At present CPPRI does not have adequate R&D infrastructure & pilot plant facilities for processing of recycled fiber. It is therefore recommended that during 12th Five Year Plan, adequate funds may be allocated to CPPRI for creation of Center of Excellence on paper recycling inclusive of R&D infrastructure & pilot plant facilities.

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(B) ENERGY, ENVIRONMENT & TECHNOLOGY

21. Support for technological upgradation in wood, non-wood & RCF/waste paper based mills There is need of substantial capital investment for technological upgradation and capacity expansion to meet the short term as well as long term demand forecast and environmental obligations. In order to sustain the required growth rate, the industry requires financial assistance in the form of interest subsidies on energy & environment friendly technologies. The following two interventions are needed by the Industry from Government. (i) Various technological interventions essential to address the technology gap in the wood, agro & recycled fibre based paper mills have been identified. The details are placed in Annexure-VII. It is proposed that the difference between LIBOR linked rates and Indian bank lending rates may be provided as interest subsidy on selected technologies for modernization and technology upgradation. (ii) Keeping capital intensive nature of the sector in mind, debt to equity ratios should be the same as applicable to infrastructure sector. (iii) It is also proposed that loans should be provided on long term basis to the pulp and paper industry, as the returns are not attractive. 22. Over the years, there has been a lack of R&D infrastructure for developing economically viable indigenous technologies. Thus in the 12th Five Year Plan there is a need to allocate adequate budget for strengthening of R&D Infrastructure to support the industry in achieving the envisaged goals. 23. The cost of expansion and setting up of new units is substantial primarily due to high cost of imported, state of the art technologies. Therefore, government policies should encourage leading machinery manufacturers to establish manufacturing facilities in India. 24. There is need to simplify the procedure for environmental clearance for expansion and capacity addition projects undertaken by the mills. In this context, Paper Mill Associations have been advised to table their detailed proposals to MoEF for simplification of the procedures. To address the issue related to switching over from concentration to load based environmental emission standards, Paper mills may submit their proposals to MoEF for redressal of the problem.

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(C) HUMAN RESOURCE DEVELOPMENT

25. It is recommended to strengthen and create infrastructure in the existing identified ITIs (56 numbers) located near the clusters of pulp & paper mill for starting a certificate course in pulp & paper. This will help to meet the industrys requirement of technical manpower by the end of 12th Five Year Plan. 26. Additionally, it is proposed that the capacities/ capabilities of 8 existing Institutions imparting Degree/Diploma courses in pulp & paper may be improved. This may be done by way of creating additional infrastructure and revision of course contents as per the requirement of the industry. 27. As a nodal research organization, CPPRI needs to intensify its capabilities in the area of HRD by way of advanced capsule courses for industry sponsored candidates. 28. A committee needs to be constituted for framing the course content. This committee may consist of industry experts, scientists and academicians. The course developed needs to be accredited by the Director General of Employment & Training (DGET). 29. Formation of sector specific Council for Skill Development with the involvement of pulp & paper sector

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CHAPTER 9 PRINTING INDUSTRY

CHAPTER 9
Printing industry plays a predominant role in promoting literacy and knowledge dissemination. The composition of the Indian Printing Industry is a heterogeneous mix of Basic Letter Press, Lithography (Offset Printing), Gravure Printing, Screen Printing, Flexography Printing, Digital Printing, Web Printing etc. With universalisation of education and increased incomes, the printing and publishing industry is expected to maintain a buoyant growth. Within the organized manufacturing, printing and publishing segment of paper and related sector accounted for close to 40% of persons employed and output3. Total output of printing and publishing industry in 2007-08 was Rs 22907 crore and this sector employed 1.45 lakh persons. Table: 21 Employment and Output in Paper and Printing Industry (Output in Rs crore and persons employed in 000)4 Paper & Paper Printing & Publishing Share of Printing & products Publishing in total Paper Sector Persons Value of Persons Value of Persons Value of employed Output employed Output employed Output 174.9 20534.0 113.0 11044.3 39.2 35.0 178.1 22696.8 115.4 12942.4 39.3 36.3 177.7 24887.6 134.9 16894.0 43.2 40.4 190.1 27663.6 144.6 19596.4 43.2 41.5 251.4 35863.9 145.1 22907.5 36.6 39.0

2003-04 2004-05 2005-06 2006-07 2007-08

Along with the national demand, there is a phenomenal market for exports of printed materials. In the year 2009, the global exports of printing materials amounted to nearly seventy billion dollars.

3 Unorganized segment in this sector as per the National accounts Statistics, 2011 averaed 35.5% during 20042010. The share of the unorganized sector, however, has been declining and its share was 32.8% in 2009-2010. 4 Based on Annual Survey of Industries- Various Issues

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Table: 22 Global Exports of Printed Materials Chapter Head 4819 4820 4821 49 Products Cartons, Boxes, Cases, Bags etc. Registers, Account Books, Note Books etc. Paper or Paperboard, Labels of all kinds etc. Printed Books, Newspapers, Pictures etc. Total Exports in US$ billion Value of Exports During the year 2009 ($ billion) 16.70 3.72 4.26 44.99 69.67

Source - Wits UN-Comtrade Database (HS-2002

In comparison, the total exports of printed materials from India is given in Table-2 below: Table: 23 Exports of Printed Materials from India Products Exports from Exports from India during India during the year 2005- the year 200910 06 (Rs. Crores) (Rs. Crores) Cartons, Boxes, Cases, Bags etc. Registers, Account Books, Note Books etc. Paper or Paperboard, Labels of all kinds etc. Printed Books, Newspapers, Pictures etc. 147.57 248.48 60.32 633.04 1089.43 262.22 376.54 83.01 961.91 1683.68

Chapter Head

4819 4820 4821 49 Total: -

Source- DGCI & S

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Fiscal and Policy Interventions A. Export and Import Policy

1. Presently, exports to Nepal and Bhutan can be effected UNDER BOND without payment of duty only if the payment is received in convertible foreign exchange. Generally, the customers (including the Govt. agencies) in Nepal and Bhutan prefer to pay in Indian rupees to the Indian manufacturers for goods supplied to them. As such, the clearances of such exports from India have to be made on payment of duty. As against this, customers in Nepal and Bhutan can import goods from any other country without payment of customs duty. It is therefore suggested that Exports of printed materials to Nepal and Bhutan (even if the payments are received in Indian rupees) should be given all incentives as applicable to other exports. Further, exports to Nepal and Bhutan should also not have any incidence of local taxes. Publishers abroad award jobs of printing text/general books to Indian printers, wherein the printers are required to not only export the printed books but also to supply the same for domestic consumption. Such jobs executed by DTA print export units, where payment is received in foreign exchange, could be termed as deemed export without insisting on the compliance of International Competitive Bid (ICB) procedure.

2.

B. Customs Duty on Import of Printed Materials 1. Printed books & manuals are exempted from customs duty vide Serial No.160 of Customs Notification No.21/02 dated 01.03.2002. The central excise duty is also nil for these items. On the other hand, paper and paperboard required as inputs for printed materials are chargeable to customs duty at 10% with applicable CVD. The total quantum of duty etc. thus works out to a figure of 19.72% on import of paper and paperboard. This is an inverted duty structure and correction of this anomaly will benefit the printing industry. 2. The world of printing is going through radical transformation through R&D, innovation, technology upgradation and automation. Global competition is posing to be a powerful challenge. Integrated graphics and digital printing will become the order of the day. Pressure due to customers quality consciousness and the concept of spot or instant delivery expectation is putting the industry to serve test. The only strategy of getting over the 53 |

hump is continuous technological upgradation and facilitating an appropriate infrastructure environment backed by adequate institutional framework to ensure easy availability of required skilled workforce to operate the present modern machinery & equipment together with adequate testing and research facilities. 3. There are only a few Engineering Institutes in the country which offer Printing Engineering as a regular course. However, none of these institutions offering training at the diploma level are equipped with modern machinery which is so necessary for imparting practical training and developing the requisite skills. The few existing machines installed have become obsolete and thus there is an immediate need to install the most modern state-of-the art equipment in keeping pace with the technological advancement that has taken place in the printing industry all over the world, for developing a skilled workforce. While there is a need to develop at least 6 lakh skilled workmen to operate the modern machinery and equipment that would be required to meet the expected printing requirements in the next 5 Year Plan, it is suggested that 20 institutes may be considered for being strengthened and equipped with the required infrastructure. Industry could provide support in developing courses and accreditation of such institutes to ensure employability of trained persons. While cost estimates may be made later, allocation of Rs. 30 crore in the 12th Five Year Plan may be considered. The printing industry does not have any industry development council. It may be desirable to set up such a body with adequate representation from all stakeholders including some earmarked membership from small entrepreneurs.

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ANNEXURES
Annexure-I Minutes of the First Meeting of the Working Group on Pulp & Paper Industry held on 30.05.2011 Terms of Reference of Sub-Committees on Raw material

Annexure II

Annexure III Terms of Reference of Sub-Committees on Waste Paper Annexure IV Terms of Reference of Sub-Committees on Technology, Energy and Environment Terms of Reference of Sub-Committees on Human Resource Development Business Models for raising Plantations List of technological interventions

Annexure V

Annexure-VI Annexure-VII

Annexure-VIII Minutes of Meeting of Working Group on Paper held on 29.08.2011 Annexure-IX Minutes of Meeting held on 28.09.2011

LIST OF TABLES

Page No.

Table 1 Table 2 Table 3 Table 4 Table 5 Table 6 Table 7 Table 8 Table 9 Table. 10 Table. 11 Table. 12 Table. 13 Table. 14 Table. 15 Table. 16 Table. 17 Table. 18 Table. 19 Table. 20 Table. 21 Table. 22 Table. 23

Varietywise production of paper/paper board & technologies used byWorldsleadingmanufacturersandstatusofIndianmills Varietywise Production of Paper from different Raw materials, milliontons(201011) ProjectedConsumptionofPaper(Milliontons) ProjectedProductionofPaper(Milliontons)
Export & Import of Paper, Paper board & Newsprint, million tons Projected Imports of Paper(Milliontons) Availability of Agro based Raw materials, million tons/annum Status of availability of RCF/waste paper Productwise pattern of growth demand Projected demand of waste paper for next five years without improvement in current recovery rate Projected demand of waste paper for next five years with improvement in current level of recovery Major Constraints Strategic structured plan for addressing the issues Technological interventions for at source reduction Additional manpower required by the Indian Paper Industry Technical manpower required by the Indian paper industry Process stream technical manpower required by the Indian paper industry Institutions imparting training in the area of pulp & paper Budget Allocation to ITIs Funds required for Upgradation Employment & Output in Paper & Printing Industry Global exports of printed materials Exports of printed materials from India

4 9 10 11 13 13 16 16 17 18 19 20 22 26 30 30 31 32 33 34 51 52 52

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LIST OF FIGURES
Page No.

Fig.1 Fig.2 Fig. 3 Fig.4 Fig.5 Fig.6

Roadmap of Indian paper industry Growth of Indian Paper Industry Porters five forces analysis of Indian Paper Industry Structure of Indian Paper Industry Variety-wise Production of Paper from different segments of Indian Paper Industry Projected consumption & production of paper

2 3 7 8 9 12

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LIST OF ABBREVIATIONS
A.D A.P. AOX B.D CAGR CPPRI COD CERC CERs CVD CDM DPR ETP EPR FDCs GIM GDP GST HRD Ha LIBOR M.P. MSP R&D RCF REDD+ SAD TDS TUFS USD VAT WP WDV WOW

:AirDried :AndhraPradesh :AdsorbableOrganicHalides :BoneDried :CompoundAnnualGrowthRate :CentralPulp&PaperResearchInstitute :ChemicalOxygenDemand :CentralElectricityRegulatoryCommission :CertifiedEmissionReductions :CountervailingDuty :CleanDevelopmentMechanism :DetailedPrefeasibilityReport :EffluentTreatmentPlant :ExtendedProducerResponsibility :FieldDataCollectionSystem :GreenIndiaMission :GrossDomesticProduct :GoodsandServiceTax :HumanResourceDevelopment :Hectare :LondonInterbankOfferedRate :MadhyaPradesh :MultiStakeholderPartnership :ResearchandDevelopment :RecycledFibre : ReducingEmissionsfromDeforestationandDegradation :SpecialAdditionalDuty :TotalDissolvedSolids :TechnologyUpgradatationFundScheme :USDollar :ValueAddedTax :WastePaper :WrittenDownValue :WealthOutofWaste

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ANNEXURE-I

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| v

| vi

| vii

| viii

| ix

| x

Annexure

| xi

| xii

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ANNEXURE-II TERMSOFREFERENCEOFSUBCOMMITTEEONRAWMATERIAL
ThecommitteeshallgiverelevantinputstothefollowingtermsofreferenceoftheWorking Group 1. To update national inventory of forest based cellulosic fibers, take stock for the availability and status of upstream linkages of them and other fibres like Bagasse/straw, waste paper etc. as raw materials for paper units, identify problems arealikefibredeficienciesgrowingimportofwastepaperetc.andsuggestmeasures toensuresustainedavailabilityofrawmaterialstomeettheincreasingdemand. 2. The Sub Committee will indicate the milestones to be achieved in the 12th plan in the context of long term goals and recommend programs/schemes/measures that aretobeinitiated,continuedordiscontinuedinthe12thplanperiod. In this reference, in addition to the above, the activities of the sub group must include the following a) The subcommittee must explore the possibility of the allocation of degraded forest land so as to ensure a sustained availability of wood based fiber resource for the paperindustry b) It should investigate the suitability of the Multistakeholder Partnership model of the Ministry of Environment & Forests (MoEF) and devise a workable solution suitable/beneficialtoallthestakeholders. c) The sub committee will study the modification in harvesting technique employed by farmers and evaluate the possibility of maximizing the collection of wheat straw so as to increase its availability to the paper industry. A manufacturer of harvesting equipment and an expert from Punjab Agricultural University should be short listed bytheindustryforthisstudy.Ifrequired,fundsmaybemadeavailablefromtheCess fundstocarryoutthisstudy. d) The Sub committee should present the possibility of using other agro residues such asGroundnutShellsforpulp&PaperIndustry

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Forthepurposeofworking,thesubcommitteeisfurtherbifurcatedasperfollowingdetail.

GroupI
Themembersofthegroupshallbeasfollows:

1. Sh. R. K. Goel, Inspector General (Forests), Ministry of Environment & Forests, Govt. ofIndiaChairman 2. Sh. A. M. Singh, IFS, Deputy Inspector Generalof Forests, Ministry of Environment & Forests,Govt.ofIndia 3. Sh. Piare Lal, General Secretary, Agro Forestry Farmers Association An NGO Member 4. Sh.R.C.Mall,MD,EmamiPapersLtd., 5. Sh.AnilKumar,CEO&ED,ShreyansPapersLtd.,

GroupIwillexamineandgiveareportonTORa)andb)asdetailedabove.

GroupII
Themembersofthegroupshallbeasfollows:

1. Sh.R.C.Mall,MD,EmamiPapersLtd.,Chairman 2. Sh.AnilKumar,CEO&ED,ShreyansPapersLtd.,
3.

GroupIIwillexamineandgiveareportonTORc)andd)asdetailedabove.
ThesubcommitteemayalsocooptmembersfromICFRE/IIT/CPPRIaspertherequirement.

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ANNEXURE-III TERMSOFREFERENCEOFSUBCOMMITTEEONWASTEPAPER
ThecommitteeshallgiverelevantinputstothefollowingtermsofreferenceoftheWorking Group: 1. The subcommittee must come out with concrete proposals for improving the recovery of post consumer waste paper for reuse in the industry. The committee must evaluate all the previous initiatives carried out so far and the present practices inordertocriticallyevaluateoperationalbottlenecksinincreasingtheavailabilityof waste paper for paper industry. Specific references should be made to the Japan ModelandthepracticesadoptedbyITCBhadrachalaminthisregard. 2. The sub committee must study the waste paper recycling model bei g practiced in HyderabadoranyothersuchMunicipalCorporationselsewhereinthecountry. 3. The sub committee should coordinate a pilot scale study on the collection of the entire municipal solid waste and subsequent segregation of waste paper from other waste and critically evaluate the sustainability and viability of such a model. ITC Ltd may consider taking on collection and segregation of municipal solid waste in Hyderabad and Warangal districts of Andhra Pradesh to source its waste paper requirement.NepaLtd.,willcarryoutasimilarexerciseinIndore. 4. Thesubcommitteewillindicatethemilestonestobeachievedinthe12thplaninthe contextoflongtermgoalsandrecommendprograms/schemes/measuresthatareto beinitiated,continuedordiscontinuedinthe12thPlanperiod. Themembersofthissubcommitteeinclude: 1. 2. 3. 4. Shri.RCRastogi,CMD,KhatemaFibresLtdChairman ShriPramodAggarwal,CMD,RamaPapersLtd; ShriPSPatwari,ExecutiveDirector,EmamiPapersLtd; ShriBVSJogaRao,DivisionalHead(Commercial),ITCLtd;

The Committee may coopt members from the other research and academic institutions on needbasis.

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ANNEXURE-IV TERMS OF REFERENCE OF SUB COMMITTEE ON TECHNOLOGY, ENERGY AND ENVIRONMENT

ThecommitteeshallgiverelevantinputstothefollowingtermsofreferenceoftheWorking Group 1. Toarticulatethelongtermgoalstobeachievedintermsofgrowth,competitiveness andshareinglobaltradeinthepaperandpulpsector. 2. To review the current status of paper and pulp industry in terms of structure and capacity, productivity, economies of scale, efficient usage of resources, sustainable use of fibre and value chain management, forward and backward linkages etc. and identifytheissuesandgapareasthatneedtobeaddressedtoachievethelongterm goals. 3. To estimate the year wise demand and capacity for all segments of paper industry for indigenous consumption as well as for export upto 201617 in the perspective of the long term goals and to assess the requirement of raw material and other inputs, skilledmanpower,infrastructureetc.formeetingthesame. 4. To analyse trend of export/imports visvis global market, identify potential markets, its demand and competitive source of supply and suggest measures to realize export potential and depth of indigenous manufacturing of paper as per long termgoals. 5. To benchmark the indigenous paper industry against international best practices, review the status of existing technology and evolve a comprehensive strategy for bridging the gap, where necessary, including the needs for further R&D activities and/or technology collaboration to upgrade technology, economize on consumption of energy and increase productivity so as to make the paper industry globally competitive. 6. To analyse the issues of environmental implications of paper manufacturing and is forest/agro based raw material linkage, review present status of mitigation measures including farm forestry, forest management, multi stakeholders partnership etc. and evolve a comprehensive framework of environment friendly practices. 7. Thesubcommitteewillindicatethemilestonestobeachievedinthe12thplaninthe context of long term goals and recommend programs/ schemes/measures that are tobeinitiated,continuedordiscontinuedinthe12thplanperiod. 8. The sub committee will also look into the issue of Technology Upgradation Fund for thepapersector.
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 Themembersofthesubcommitteewillbeasfollows: 1. ShriRRVaderah,ManagingDirector,BILTLtd.Chairman 2. ShriPradeepDhobale,Director,ITCLtd; 3. ShriKSKasivishwanathan,ManagingDirector,SPBLtd; 4. Shri.MadhukarMishra,ManagingDirector,StarPaperMillsLtd; 5. ShriArunGBijur,ManaginfDirector,SPBPCLtd; 6. ShriAnilKumar,CEO&ED,ShreyansIndustriesLtd; 7. ShriRCRastogi,CMD,KhatemaFibersLtd; The Committee may coopt members from the other research and academic institutions on needbasis.

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ANNEXURE-V TERMS OF REFERENCE OF SUB COMMITTEE ON HUMAN RESOURCE DEVELOPMENT

ThecommitteeshallgiverelevantinputstothefollowingtermsofreferenceoftheWorking Group 1. The Sub Committee will present an assessment of the requirement of skilled manpower needed by the pulp & paper industry on a long term basis as well as duringthe12thplanperiod. 2. The sub group will co opt a resource person from National Skill Development Council (NSDC). The NSDC has sector specific training modules. The NSDC shall be askedtoprovidenecessaryinputsfortrainingofmanpowerinthepapersector. 3. The Committee will evaluate the level of training in various institutions imparting courses in pulp & paper technology and put on record their present competencies. The Committee may visit these institutions and come up with proposal to enhance their capabilities through creation of regional centres of manpower training for papersector. 4. The subcommittee shall get inputs from industry associations regarding their requirement of skilled manpower by their member mills along with workable model for absorption upon training. The industry may sponsor the candidates for training sothatthetrainedpersonsareassuredofplacements. 5. The Sub Committee will indicate the milestones to be achieved in the 12th plan in the context of long term goals and recommend programs/schemes/measures that aretobeinitiated,continuedordiscontinuedinthe12thPlanperiod.

SUBCOMMITTEEONHUMANRESOURCEDEVELOPMENT 1. 2. 3. 4. Othermembersmaybecooptedbythesubcommitteeonneedbasis Sh.MadhukarMishra,MD,StarPaperMillsLtdChairman Sh.O.P.Goyal,WholetimeDirector,JKPapersLtd., Sh.AnilKumar,CEO&ED,ShreyansIndustriesLtd., Brig.S.K.Mutreja,CMD,NepaLtd.,

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ANNEXURE-VI

BUSINESS MODELS FOR RAISING PLANTATIONS

MODEL - 1
The Forest Development Corporations (FDCs) will raise plantation on their own Under this proposal, it is envisaged that the required quantum of degraded forest lands are given to the Forest Development Corporations (FDCs).The FDCs will raise the plantations in the respective mill catchment areas involving local people and the Industry. The period of the project is proposed to be 20years with 3 harvest rotations each with 5 years duration in continuation with another 5 years for harvesting of the last set of trees, thus making it a total period of 20 years. Pulp wood species - both indigenous and exotics - would be grown. Parts of the land (in parcels) will be regenerated with naturally assisted regeneration and protected to maintain biodiversity so that both plantations and primary forests are maintained side by side. The working plans would need to developed accordingly and necessary changes in working plan guidelines and approval process need to be made. The FDCs will arrange funds from Banks, NABARD or other institutions. These can be raised against the quantity commitment guarantee to be given by the Industry. The FDCs can also explore tie ups with other Government Funds (viz. MNREGS, CAMPA, ITDA) and Foreign aided Funds like World Bank etc. The first felling would start from 6th year onwards and hence the investments are required for 5 years. Binding Agreement for pulp wood supply FDCs would enter into a binding agreement with industries for the entire duration of the plantation wood supply spanning over 20 years (with 3 harvestrotations each with 5 years duration with another 5 years for harvesting the last set of plantations). Under this agreement both industry and FDC would be bound to purchase and supply the committed quantities. Price The wood, cultivated through efficient and productive operations, would be sold to the industries at mutually agreed price arrived at with due recognition to long term commitment of regular and reliable off take of bulk quantities by the industries.

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Role of Paper Industry 1. Paper industry shall give a firm commitment on the off take of the pulp wood quantity. 2. The technical knowhow shall be provided free of cost to the FDCs for raising plantations. 3. Improved planting stock shall be supplied at an agreed transfer price for raising the plantations. Role of FDCs 1. FDCs shall raise loans for funding the project cost. 2. The entire activity of raising plantations, maintenance and harvest will be sole responsibility of the FDCs. 3. FDCs shall supply committed quantity of pulp wood of specified quality (as per the binding agreement and mutually agreed price as per mechanism as mentioned above)

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MODEL -2

The Forest Development Corporations (FDCs) to raise plantation with Industry as Operating Agency Under this option it is envisaged that the degraded forest lands are given to the Forest Development Corporation. The FDCs will raise the plantations in the respective mill catchment areas with industry working as Operating Agency (on the lines of Contract Farming). The period of the project is proposed to be 20 years with 3 harvest rotations each with 5 years duration in continuation with another 5 years for harvesting of the last set of trees, thus making it a total period of 20 years. Pulp wood species - both indigenous and exotics - would be grown. Parts of the land (in parcels) will be regenerated with naturally assisted regeneration and protected to maintain biodiversity so that both plantations and primary forests are maintained side by side. The working plans would need to developed accordingly and necessary changes in working plan guidelines and approval process need to be made. Investment would be made by the respective paper industry in proportion to their raw material requirements. The investment would be made by Industry as Operating Agency with User Rights for the produce under the principles of contract farming with 85% industry right of the produce and 15% FDCs rights over the produce. While the FDC would be free to sell the produce at market price, industry would have first right of refusal for the same. This will start from the 6th year when the first cycle harvest commences. FDCs will help the Industry to raise finances wherever possible. Binding Agreement for pulp wood supply FDCs would enter into a binding agreement with industries for the entire duration of the plantation spanning over 20 years (with 3 harvest rotations each with 5 years duration with another 5 years for harvesting the last set of plantations). Under this agreement both industry and FDC would be bound to purchase and supply the committed quantities with Industry working as the Operating Agency for development of plantations and sourcing of wood. Price The 85% industry share of wood, cultivated through efficient and productive operations, would be sold at par with cost of production. The 15% FDC share of wood would be sold at open market price with first right of refusal to industry.

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Role of Paper Industry 1. The paper industry would operate as Operating Agency and raise the plantations. 2. Paper industry shall give a firm commitment on the off take of the pulp wood quantity. 3. The industry shall fund the project cost, in the form of Operating Agency. 4. The technical knowhow shall be provided free of cost to the FDCs for raising plantations. 5. Improved planting stock shall be supplied at an agreed transfer price for raising the plantations. Role of FDCs 1. FDCs shall supply committed quantity and specified quality of pulp wood (as per the binding agreement) as per mutually agreed price mechanism as mentioned above. 2. FDCs shall help and co-operate with the Industries for raising funds for the project. 3. FDCs shall help in approval of the working plans. 4. The respective State Government would ensure appropriate guidelines and changes in rules for smooth operations of industry as Operating Agency for development of plantations and offtake of wood.

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ANNEXURE-VII

LIST OF TECHNOLOGICAL INTERVENTIONS

LIST OF TECHNOLOGIES AND INVESTMENT REQUIREMENTS FOR WOOD BASED MILLS:S.No. Technologies Installed Cost in Rs. lakhs/tpd of paper/ product capacity 8.00 Benefits

1.

Debarkers, Chippers & Chips Screens Low kappa pulping for batch or continuous cooking

2.

16.00

3.

ECF Fibreline (Washing, ODL Screening & Bleaching)

19.00

4.

Falling film evaporators high solids firing

for

15.00

5.

High solids & high pressure recovery boiler Lime kiln Recausticising & Modern

23.00

6.

17.00

7. 8.

9.

10.

Producer gas plants Chemical Preparation Plants for ECF bleaching (ClO2, O2 & Others) Head boxes, shoe press, size press, totally enclosed hoods & calendar With Single Soft-nip calender With Back-to-back (2nip) calender Vacuum & compressed air systems Finishing house modernization Captive Co-gen Power plant Modern water treatment & recycling system ETP up-gradation

3.15 19.00

Removal of bark from logs, feeding of uniform chips into digesters Low kappa pulp leading to lower consumption of bleaching chemicals, lower steam requirement. Improved washing & screening efficiency, less impact on environment due to ECF bleaching High solids of black liquor, higher steam economy, less maintenance costs High black liquor to steam generation ratio, high pressure steam for turbines. Efficient causticization and solid waste management by re-burning and reuse of lime sludge Substitution of fossil fuels Cost of effective production of bleaching chemicals (CIO2 & O2, etc) Steam saving and better runnability of paper machine

21.00 24.15 2.70 Energy system efficient vacuum

11. 12. 13. 14.

1.30 44.00 1.30 1.5

Lowering of finishing house losses Efficient power generation. Minimization of fresh water consumption Achievement of Environmental norms. xxiv |

LIST OF TECHNOLOGIES FOR AGRO BASED MILLS

S.N. Technologies Cost in Rs. lakhs/tpd paper / product cap. 10.00 Benefits

1.

Raw material storage, reclaim & cleaning system

2. 3.

Rapid Horizontal Continuous Cooking system ECF Fibreline (Washing, Screening & Bleaching)

15.00 30.00

4.

Falling film evaporators for high solids firing High solids & high pressure recovery boiler Lime kiln Recausticising & Modern

17.50

5.

23.00

6.

16.70

7. 8.

9.

10. 11. 12. 13. 14.

Producer gas plants Chemical Preparation Plants for ECF bleaching (ClO2, O2 and Others) Head boxes, shoe press, size Press, Totally enclosed Hoods &calender Vacuum & compressed air systems Finishing house modernization Captive power plants Modern water treatment recycling system ETP up-gradation

3.15 22.75

13.50

Efficient raw material handling, reduction in storage losses, cleaning of raw materials to reduce process & related problems. Energy efficient cooking of bagasse & wheat straw Improved washing & screening efficiency, less impact on environment due to ECF bleaching. High solids of black liquor, higher steam economy, less maintenance costs High black liquor to steam generation ratio, high pressure steam for turbines Efficient causticization and solid waste management by re-burning and reuse of lime sludge Substitution of fossil fuels Cost of effective production of bleaching chemicals (CIO2 & O2, etc) Steam saving and better runnability of paper machine Energy efficient vacuum system Lowering of finishing house losses Efficient power generation. Minimization of fresh water consumption Achievement of Environmental norms.

1.90 0.80 30.00 1.50 1.75

&

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LIST OF TECHNOLOGIES FOR RECYCLED FIBRE BASED MILLS (i) Un Bleached Grades
S. No 1. 2. 3. Technologies Drum Pulper / High consistency pulper Efficient Screening systems Head boxes, shoe press, hood &calender Vacuum & compressed air system Finishing house modernization Captive power plant Cost, Rs. lakhs/t of paper/ product 3.00 4.00 13.50 Benefits Low power consumption and fines generation. Efficient cleaning of stock Steam saving and better runnability of paper machine Energy efficient vacuum system Lowering of finishing house losses Efficient power generation. Minimization of fresh water consumption Achievement of Environmental norms.

4. 5. 6.

1.50 4.00 30.00

7. 8.

Modern water treatment recycling system ETP up-gradation

&

1.50 1.75

(ii) For Bleached Grades

S. No . 1. 2. Technologies Cost, Rs. Lakhs /t of paper/ product 2.00 30.00 Benefits

High Consistency Pulpers 2-3 loop deinking/ bleaching

3. 4.

Efficient Screening system Head boxes, shoe press, hood &calender Vacuum & compressed air system Finishing house modernization Captive power plant Modern water treatment recycling system ETP up-gradation &

4.00 13.50

5. 6. 7. 8. 9.

1.50 6.00 30.00 2.00 1.75

Low power consumption and fines generation. Better quality pulp production with high brightness. Efficient cleaning of stock Steam saving and better runnability of paper machine Energy efficient vacuum system Lowering of finishing house losses Efficient power generation. Minimization of fresh water consumption Achievement of Environmental norms.

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ANNEXURE-VIII MINUTESOFMEETINGOFWORKINGGROUPONPAPERHELDON29.08.2011

MINUTES OF THE MEETING OF THE WORKING GROUP ON PULP AND PAPER SECTOR FOR 12TH FIVE YEAR PLAN IN ROOM NO 152, UDYOG BHAWAN, NEW DELHI HELD ON 29.8.11

A meeting of the working group on Pulp & Paper sector was held on 29th August, 2011 in Room No. 152, Ministry of Commerce & Industry at Udyog Bhawan, New Delhi under the chairmanship of Sh. Rajinder Pal Singh, IAS, Secretary, DIPP, Ministry of Commerce & Industry, Government of India. While initiating the proceedings of the meeting the Chairman welcomed all the members and requested Dr. R. M. Mathur, Director, CPPRI to present the Status & Issues in Pulp & Paper Sector to be followed by presentation on recommendation of each sub-committee by their respective chairpersons. The list of participants is placed as Annexure - I Dr. R. M. Mathur, Director, CPPRI made a presentation on the issues confronting the paper industry which needs to be addressed for the future growth of the paper sector. The chairpersons of the sub-committees presented recommendations of their sub-committees. The following items were discussed. 1.0 1.1 Raw Material Wood

The recommendations of the sub-committee were accepted in principle. It was agreed that reforestation of the degraded forest land could be taken up with the involvement of Forest Development Corporations (FDCs) which could involve paper industry through an acceptable mechanism without any deviation from the existing Forest Policy as per the Forest Act. Following two modalities were suggested for Paper Industry & FDCs to enter into an agreement (a) FDCs can plant trees on their own. They can raise finances from banks against a guarantee from the Paper Mills to buy the produce at specified price. (b) FDCs can engage the Paper Mills as a sub-contractor, which undertakes the entire activity including arranging finances.

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The choice of options is left to individual Mills/FDCs. It was further desired that industry may submit detailed working model for the options as above within next two weeks. 1.1.1 Social/Farm Forestry

In order to further ramp up the performance of farm forestry sector, Chairman desired that the model prevalent in sugar sector can be adopted. The farmers who are provided all the financial assistance by the industry raise the plantations. The bank loans for this purpose are drawn by the industry, which is also responsible for repayment of the loans. At the end of the term stipulated (i.e. during harvesting) farmers are paid as per the volume/weight of the produce after deducting the advances paid.

On the issue of prevalent practice of mandatory permit for Inter-State movement of wood, viz. Transit permit, Mandi fee, etc., Chairman desired that a letter be written to Chief Secretaries of all States where such permits are needed requesting them to consider modification of instructions to meet paper industrys requirement.

Industry was requested to present the state wise details of various levies/documentation that need streamlining and on receipt of the same, further action shall be initiated. 1.2 Agro Residues

1.2.1 Bagasse It was impressed that bagasse is one of the best locally available fibre that can be used by the paper industry. At present, sugar mills use 80% of the bagasse generated during cane crushing for their internal energy use and about 10-20% surplus bagasse is used in power generation which is termed as green energy generated from renewable resources. The Ministry of New & Renewable Energy (MNRE) provides incentive to the sugar industry making it more lucrative to utilise bagasse fibre as source of energy thus depriving the paper industry of this high quality bagasse fibre for papermaking. The issue was crystallized as a conflict between interests of Power Generation Vs. Fibre Scarcity on the one side and profitability of Sugar Industry Vs. Paper Industry. The subgroup was advised to hold another meeting with the representatives of Sugar Board/ISMA/MNRE & other Stakeholders to reach some kind of consensus.

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1.2.2

Retrieval of Residual Wheat Straw

Since about 25% wheat straw is not retrieved during harvesting, it was proposed that a field demonstration of post harvesting of residual straw & baling of the same should be performed. Chairman suggested that this activity should be carried out by the Industry.

1.2.3 Use of alternate Agro-based material for Papermaking Rice Straw

Technology was considered to be an issue for effective use of rice straw as alternate raw

material for papermaking. On being informed that CPPRI has set-up a demonstration plant in Andhra Pradesh, Industry was advised to identify mills who will work with CPPRI to scale-up the technology. 2.0 Recycled Fiber/ Wastepaper Recovery

India recovers only 27% of the paper consumed for re-use by the industry mainly due to absence of scientific mechanism of collection, sorting & transportation to the mills. In order to improve the recovery of waste paper, Municipalities in association with private operators/industry may work together and should come out with a workable model. On the issue of providing financial support for the said activity it was suggested that rather than direct financial support to the Municipalities, the performance based support should be considered, so that only achievers are rewarded. Further, the industry informed that waste paper has been kept under hazardous waste category by the pollution control authorities and should be removed from this category. The issue was discussed in length explaining the reason for the same. The industry was advised to submit the details of the prevailing practices in other countries before further action is contemplated. 3.0 3.1 Technology, Energy & Environment Technology Modernization Assistance Project (Tech-MAP)

On the issue of providing technology modernization assistance for the paper sector, the industry was advised to look at inducting Private Equity (PE)/FDI etc. to set up global scale plants. Therefore, in view of the high cost of capital and long gestation period, paper industry is looking for government support for technology modernization assistance. It was desired that industry should present a concrete proposal justifying how paper sector is unique and is a suitable candidate for Tech-MAP.

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3.2

Environment

On the issues raised by the industry regarding elaborate procedures for environmental clearance for capacity expansion projects, which results in delay in project implementation, it was desired to hold another meeting with representatives from Ministry of Environment and Forests regarding simplification of procedures. Industry was advised to present data on practices adopted in advanced countries on this issue, which could be considered for emulation in the country. 3.2.1 Common ETP/Recovery for Agro/RCF Mills

It was suggested that the units located in the clusters may come together and set-up common ETP/ Recovery facilities. Government does not wish to be a party to setting-up or running these Plants. 3.2.2 Water Conservation

It was informed by paper industry representatives that as the present pollution discharge norms are concentration based and not load based, mills do not have the motivation to conserve water. Chairman desired that one member from MoEF be invited to discuss this issue, so that further action could be planned.

3.3

Energy

3.3.1 Coal
Regarding Industry's request for Coal at same price as Power Plants, Chairman indicated that Government has in principle, decided that all users will pay same price. Request for Coal blocks in cluster mode and preference for allocation of gas etc. needs to be taken-up further with the concerned Ministries. 4.0 Human Resource Development

The following milestones were proposed to be achieved based on recommendations of the subcommittee Creation of infrastructure of ITIs (56 numbers) located near the clusters of pulp & paper mills for starting a certificate course in pulp & paper to meet the industrys requirement of technical manpower by the end of 12th plan. Upgradation of capabilities of 8 existing Institutions in respect of revision of courses to meet the manpower requirement of the industry.

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Strengthening of CPPRI capabilities in the area of HR & Training to intensify its capabilities for advance capsule course as per the need of industry.

The recommendations and proposals of the subcommittee were accepted in principle.

5.0

Fiscal Incentives

The industry was advised to examine the same and submit a consolidated proposal. Meeting ended with the vote of thanks to the chair.

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ANNEXURE MEETING OF THE WORKING GROUP ON 29TH AUGUST 2011 AT 3.00 PM IN CONFERENCE ROOM 152, UDYOG BHAWAN, NEW DELHI UNDER THE CHAIRMANSHIP OF SECRETARY, IPP S.NO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Name & Designation Shri R.P. Singh, IAS Shri Talleen Kumar, IAS Shri Rajat Kumar, IAS Shri Satish Kalothra Shri. Jogarao, Sr. Vice President Brig. S.K. Mutreja Shri. D.S.Gaur Shri. R.C. Rastogi Shri. M Mishra Shri. Arun G Bijur Shri. R.C.Mall Shri. Pramod Agarwal Shri. Jai Prakash Dr. Vimlesh Bist Shri. R. Vijay Kumar Dr. Izzatullah Shri. Ajit Chavan Shri. A.M. Singh Dr. R.K. Jain Dr. Sanjay Naithani Dr..B.P. Thapliyal Dr.R.M.Mathur, Office/Organization Secretary, DIPP Joint Secretary, DIPP Director, DIPP Under Secretary ITC Ltd NEPA LTD NEPA LTD IRPMA IPMA/STAR PAPER SPB-PC EMAMI PAPER LTD IARPMA IARPMA CPPRI INMA DIRECTOR O/o MSME DY. SECY.DEPT. OF COMMERCE DIG, MoEF CPPRI FRI DEHRADUN CPPRI DIRECTOR, CPPRI

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ANNEXURE-IX MINUTESOFMEETINGOFHELDON28.09.2011

WORKING GROUP FOR PULP & PAPER SECTOR FOR 12TH FIVE YEAR PLAN

MINUTES OF THE MEETING HELD ON 28.09.2011 AT NMCC CONFERENCE HALL, VIGYAN BHAWAN, NEW DELHI

A meeting of the Sub Committee of the working group on pulp and paper was convened to discuss issues related to use of bagasse for paper making and the issues related to emission limits and environmental clearances of expansion projects. A list of participants of the meeting is attached as Annexure. At the outset, Shri Satish Kalothra welcomed the delegates and briefed the house regarding the agenda of the meeting. Thereafter, Dr. R.M. Mathur, Director CPPRI, who Chaired the meeting, made a brief presentation on the issues to be discussed as per the agenda. Subsequently the issues were discussed in detail. Based on the discussions, the following points are minuted: USE OF BAGASSE FOR PAPER MAKING The main submission of the paper mill associations was that bagasse is one of the most valuable renewable fibre source for the paper industry. As it us used as a primary fuel in the sugar mills, very little bagasse is available for paper making. Secondly, there is a provision of certain incentives on the use of bagasse based boilers for co-generation extended through the SDF (Ministry of Consumer Affairs, Food and Public Distribution MCAFPD) and by the Ministry of New and Renewable Energy Resources (MNRE). The paper associations further submitted that the sugar sector should necessarily follow the practice of pre-drying of bagasse before it is used as a fuel. Fresh bagasse has nearly 50% moisture and this step therefore has the potential to generate surplus bagasse that can then enter the market. The representatives from the sugar industry associations submitted that the sugar cane sector was cyclic in nature. Therefore, the availability of bagasse fluctuates widely from year to year. Secondly, the entire economics of the Sugar sector hinges on the use of bagasse as a fuel. The cost dynamics of the sector is influenced largely by external factor of administered sugar cane prices. Therefore, the sugar industry is left with only energy as the main parameter to control costs. The representatives further submitted that there existed a possibility of increasing the availability of surplus bagasse in case the sugar industry gets an incentive to switch to high pressure boilers. Since such boilers consume less fuel, the availability of surplus bagasse

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from the sugar unit stands to increase substantially in case such an intervention is designed for the sector. The representatives from MCAFPD and MNRE clarified that the incentives on the use of bagasse as fuel for co-generation are largely being availed by the sugar units in the Cooperative Sector and the Federation Units. As such large major private players do not opt for this subsidy. The idea of extending the subsidy is to encourage the sugar sector to go in for modernization utilizing efficient boilers. The representatives from CPPRI informed the house that the institute has developed a technology, which is a one step dry process for separation of bagasse in to its botanical components. Thus, it is possible to separate the good quality fiber suitable for paper making from the pith and other non-fibrous component of bagasse. The sugar mills may use this technology to separate and sell quality bagasse to the paper sector and still use the residue for co-generation. Accordingly, it was decided that 1. The paper and sugar industry associations will start a process of mutual dialogue to explore the optimum use of bagasse for their mutual benefits. The technology of one step dry depithing developed by CPPRI will be demonstrated under project mode (funded out of either the 12th Plan or Cess funds) at a semi commercial scale at one of the sugar mills. ISMA and NFCSF shall indicate the name of the chosen unit in this regard. The project will be executed on a tripartite basis through ISMA/ NFCSF, IARPMA and CPPRI. The possibility of deriving funds from MNRE will also be explored for this exercise. The working group on paper will recommend the case of upgradation of the boilers in sugar mills by way of incentivizing the procurement of equipment for enhancing the energy efficiency of boilers being used in sugar mills. The Bureau of Energy Efficiency will also be involved in the process of improving the energy efficiency of the boilers in the sugar sector.

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ENVIRONMENTAL ISSUES The paper industry raised the issue of cumbersome environmental clearances for expansion projects and change of emission norms from concentration to load base limits. It was submitted that as on date, it is very difficult to set up a greenfield project in the paper sector due to numerous factors. Therefore, the industry is left with no option but to go in for brownfield capacity expansions. However, these projects still required environmental clearances, which take substantial time, whereas the entire commissioning and installing exercise is worked out on a 16-18 months scale. As per the paper industry, small capacity expansions, such as setting up of a new paper machine, need to be exempted from at least the public hearing and the industry should also be allowed to commence construction activities pending environmental clearance from MoEF. The industry also deposed that it was imperative to shift from concentration to load based emission limits. The paper industry traditionally used a lot of water for product

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manufacture. However, with technology and limits in place, the water usage in the industry is now reducing. However, this in turn raises concentrations making compliance difficult. It was clarified by the representatives of the MoEF that as far as the EIA is concerned, the procedure has already been simplified by the Ministry. As of now, each project proponent is given a specific TOR list, which must be complied with. As soon as the list is complied with, the environmental clearance is issued. As regards the emission norms, it was informed by the MoEF that there is a well established and publicly known process of standards review that exists in the Central Pollution Control Board. However, to date, there is no request from the paper industry in this regard. Accordingly it was decided that 1. Whereas the MoEF has already simplified procedures for grant of environmental clearances, the paper industry may refer the specific difficulties in writing to MoEF for further consultation and consideration. However, such requests have to be within the framework of the existing environmental laws such as Water (Cess) Act and the Environmental (Protection) Act. The paper industry associations should approach the Central Pollution Control Board with a request to shift the emissions norms to a load based regimen so that the laid down process can be started.

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The meeting ended with a vote of thanks to the Chair.

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Annexure MEETING OF WORKING GROUP ON 28TH SEPTEMBER 2011 IN VIGYAN BHAWAN CONFERENCE ROOM NO. 2005 AT 3.00 PM LIST OF PARTICIPANTS Sl. No. 1 i ii iii iv v vi vii viii ix x 2 i ii iii iv v vi vii NameDesignation Official Side Dr. R.M Mathur Adher Jha Dr. P.L. Ahujarai Dr. T.R. Meshram Satish Kalothra, Secretary Dr. R.K. Jain Dr. B.P. Thapliyal Dr. S. Panwar R.N. Jindal Dr. K.Singh Industry representative Arun G Bijur, MD Pawan Agarwal Jr. MD P.G. Mukandan, General Dr. B.L. Bhiani Jayaprakash, T, B. Shivanna Jasbir Singh,T.A. Sect. SPB Projects and Consultancy Naini Papers Ltd. IARPMA Century Pulp & Paper Mills IARPMA National Federation of operative Sugar factories National Federation of operative Sugar Factories CoCoUnder Director, CPPRI Director, Deptt of Food and Public Distribution Director, MOEF MNRE DIPP, Udyog Bhawan Scientist F, CPPRI Scientist EII, CPPRI Scientist F , CPPRI Scientist E, MOEF Scientist E-I, CPPRI Designation

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