GLOBAL COMPETITIVENESS OF

INDIAN PAPER INDUSTRY

PREFACE

India has undergone a large process of economic reforms aiming at

liberalization and attracting investments. That process, which began
already in the early 1990s, continues to have an important impact on
the whole economy, including paper pulp and paper industry. After
India has joined world trade organization, international competition in
the Indian market has increased.

This research carries out a survey on the global competitiveness f the

Indian pulp and paper industry.

We trust that this report will give a good base for planning the future
operations of Indian pulp and paper industry. I thank executives of
Ballarpur Industries Limited for the valuable help and good cooperation
in this survey.

AYUSHI SINGHAL (F-4)

IIPM
Introduction

India has undergone a large process of economic reforms aiming at

liberalization and attracting investments. That process, which began
already in the early 1990s, continues to have an important impact on
the whole economy, including paper pulp and paper industry.

The paper industry has an important role on the Indian economy. The
overall paper consumption in India has approximately reached 8
million tons in 2009, making India a large market from any
prospective. The potential per capita consumption increase, originated
on economic growth, increasing purchasing power and emerging
export- led industries, attracts companies to invest and modernize. The
increasing demand for paper puts pressure into supply of papermaking
fibers, including efficient recovery of recycled paper, use of non- wood
materials and the need to develop and expand sustainable use of
wood.

At the same time consumption in global pulp and paper markets is

intensifying. This is likely to have an increasing impact on Indian
market. Indian pulp and paper industry consist of some 400-paper
mills, mainly of small and medium size companies. There is growing
need to invest – capital is needed for mill modernization, productivity
improvements and building of new capacity. If adequate measures are
taken, India’s competitiveness could substantially be improved and the
industry be prepared for global competition.

Looking at the future, the Indian pulp and paper research institute is
carrying out a survey of the global competitiveness of the Indian pulp
and paper industry. The key objective is to analyse and give
recommendations for the Government and the paper companies on
how to improve international competitiveness.

FACTORS AFFECTING INDIAN PAPER INDUSTRY

EXTERNAL FORCES
• GDP growth and increased standard of living
• Development of export- led industry
• Growth potential in India and south- East Asia
• Development of human capital
• Legislation and government regulations
 • Access to capital
• Technology and process innovations driving efficiency and scale
of production equipment

CHANGE IN INDUSTRY STRUCTURE

• Industry size, consolidation and investment capacity
• Access to raw material, recycled fibre, non- wood fibre and wood
resources
• Minimum efficient scale and asset quality
• Quality improvements and standards
• Environmental considerations and standards
• Trade of fibre, pulp and paper products

CHANGE IN COMPETITIVE CONDUCT

• Foreign investment and the attractiveness of Indian markets
• Modernization of existing assets and capital needs
• Development of pulp and paper industry in South East Asia
• Consolidation and acquisitions as growth vehicle
• Partnerships and alliances
• Management of scale and scope through networked production

CHANGE IN INDUSTRY PERFORMANCE

• Global competitiveness
• Improvement of profitability
• Increased capital intensity
• Tax incentives
• Shareholder returns
• Improvement of paper and related products trade balance