The paper industry has hailed the government's commitment to increasing agroforestry in the country, as stated by the Finance Minister in her budget speech and later endorsed by the Ministry of Agriculture and Farmers Welfare.
The availability of an additional 25 lakh hectares of land for agroforestry, in addition to the paper industry's own agroforestry drive, will go a long way toward ensuring raw material security for all wood-based industries, according to the Indian Paper Manufacturers Association (IPMA).
Industry on upbeat
"The paper industry is encouraged by the Finance Minister's special mention of policy initiatives for agroforestry." Over the last several years, the industry has worked tirelessly with over 5 lakh marginal farmers to successfully plant 12 lakh hectares of largely degraded land. However, despite paper industry's efforts to promote plantations, domestic wood availability remains inadequate," said AS Mehta, President of the Indian Paper Manufacturers Association (IPMA)
Policies and legislative changes to promote agroforestry, such as support for bund plantations under the Ministry's various schemes and loans / other credit facilities as provided in the case of agriculture crops, can undoubtedly help the paper industry's efforts.
IPMA claims that if an additional 25 lakh hectares of degraded land in the country is harnessed for the agroforestry programme, it will provide employment for at least 10-15 lakh people, supplement farmer incomes, increase the country's tree cover, provide environmental benefits, and generate enough raw material for all wood-based industries at globally competitive rates.
This is also required to make India's paper manufacturers competitive with ASEAN players who have long-term forest concessions in their countries and can export paper to India at zero basic customs duty under the India-ASEAN Free Trade Agreement.
Customs Duty, a Dampener
However, the industry stated that an increase in the basic customs duty on imports of recovered paper/wastepaper, an important raw material used by the paper industry, from 0% to 2.5% has been a detriment. The industry is going through a difficult period and is struggling to find raw materials due to supply-side constraints.
An increase in wastepaper import duty will raise production costs. Because the domestic paper recovery rate in India is only around 40%, compared to over 70% in developed countries, imports of recovered paper / wastepaper are critical for domestic value addition and exports, as well as meeting the country's growing demand for paper.
