The 40-Year Journey of the Indian Paper Industry

I started my career as a management trainee in a textile manufacturing group, viz Vardhman Textiles in 1973 and after working for nine years in the textile industry, I shifted as a unit head in a newly set up paper mill by the same group, Shreyans Paper Mills (now Shreyans Industries ) in 1982.

Since then, the paper industry has undergone a tremendous change. In the early 1980s, most of the paper units were using wood as raw material and both recycled and agro-based paper mills were in their nascent stage. In fact these units were set up under a government policy allowing import of a second hand paper machine with annual capacity not exceeding 10,000 MTs that is, 30 tonnes per day(TPD) paper. And so, as an incentive paper made out of these nonconventional raw materials was exempted from excise duty.

However, due to import of sub-standard paper machines and also lack of adequate managerial and technical skills, many of these units shut down. Nevertheless, many units in the non-conventional sphere survived. Since then, they have grown from strength to strength.

The most significant change in various areas of the paper industry can be listed as under.

Raw Materials
As stated above, in the 1970s and early 1980s, most of the paper was made out of wood but gradually this equation changed and at one point of time by the beginning of the 21st century production of paper was almost equally divided between wood, agro-based and recycled fiber. Thereafter due to significant pressure from the Environment Ministry and stringent implementation of various environmental laws, production gradually shifted from virgin fibre-based mills to recycled based mills. This was also done keeping in view the very high capital cost of putting up a paper mill with its own pulping street.

If we examine the present status, almost 77% of paper is made out of recycled fibre, about 7% from agro-based mills and the balance from wood-based mills.

Production technology
The biggest change in the paper industry is visible in the production technology front. I shall specifically talk about agro-based paper mills where I have invested the last 40 years of my life. Right from the raw material preparation where hardly any pre-processing was done, the changes are significant. Almost all paper mills have shifted to pre-washing of fibrous raw materials, spherical batch digester have given way to continuous digester, washing plant have shifted from poacher washers to state-of-art vacuum washers or even double drum washers. The bleaching sequence from plain hypo bleaching has shifted to minimum oxygen delignification (ODL) and in many cases to ECF bleaching.

Initially for a number of years, it was presumed and accepted that chemical recovery is not techno-economically feasible in case of agro-based mills and as a result the effluents generated and discharged were highly polluting. As mentioned earlier, the pressure from pollution control boards kept on building up and by the mid-1990s; it became clear that unless the chemical recoveries are set up in agro-based mills, the operations of pulp mills may not be allowed by the authorities.

I take pride in the fact that Shreyans Industries took a lead in the matter and became the first mill not only in the country; but in the entire world, which is based on wheat straw to set up a fully operational chemical recovery plant. This was done under a joint technical collaboration with an American consultant, co-financed by USAID under a soft loan scheme. This project was undertaken in 1995 and I am happy to say that it still remains an accepted technology and many agro-based paper mills could survive only because of this technology.

On the paper machine front, the configuration of paper machines has changed over this period, typically a paper machine would consist of an open head box, wire table consisting of rolls, open draws on the press part with very low dryness and normal dryers and conventional calendars. This has given way to pressurised hydraulic head box with cross directional control on basis weight, wire part with fully ceramic stationary drainage elements and closed press part including a shoe press which gives much dryness. Size press has become an integral part of most of the paper machines, calendaring has also significantly improved by introducing heated and soft nip rolls.

Even the finishing house has undergone the introduction of high speed winders and cutters and some automation in packing.

Manpower
Unfortunately the paper industry still suffers from non-availability of qualified manpower and most of the labour and technical persons have to be trained in-house on job. There is a severe shortage of technically qualified personnel as the number of technical institutes imparting relevant skill is very limited. Furthermore, the paper industry is not very attractive for young technocrats. Still most of the industry is managing well through a combination of technically qualified personnel and in-house trained manpower.

Resource utilisation
The paper industry has made tremendous progress in conserving energy and other resources over the last 40 years. To give a few examples:

• When we set up the unit in 1982, the standard yield, that is, pulp to raw material production was taken as 32% that is to say that out of 1,000 kgs. of bone dry raw material 320 kg of bleached pulp would be produced. This is one area which has transformed during this period and starting from a low figure of 32% presently most of the agro-based mills are achieving above 45% yield which compares well even with wood-based mills.
• It was accepted that almost 250 M3 of water was used for each tonne of paper manufactured. We were allowed to discharge 6,000 M3 of water on the basis of 30 TPD paper production in 1982. Due to various measures taken by the industry through closing the system, recycling water in the processes this figure has come down to 50 M3 per tonne of paper and in certain cases it is as low as 40 M3 per tonne of paper. In case of recycled paper mills, the figure is significantly lower at about 10-15 M3 per tonne of paper. While in certain cases unbleached paper manufacturers are claiming zero liquid discharge.
• Steam consumption of 11-12 MTs per tonne of paper was an accepted norm in the paper industry which has come down to 6-7 MTs per tonne of paper for a composite mill over this period of time. This has been done through improving the cooking and bleaching processes and also strengthening the press part of the paper machine resulting in significantly lower steam at the paper machine.
• Similarly on electric power consumption, the change has been startling. From a level of almost 1,500 KWH per tonne of paper to present consumption from 800-900 KWH per tonne of paper in case of many mills.

End-product quality
This is one area which has seen tremendous change over this period. It was presumed that paper made out of recycled fibre or agro-based paper would be sub-standard in quality due to lack of cleanliness in the paper and very low brightness and also poor strength properties. In writing and printing paper, brightness of 65-68% was the accepted norm and even BIS Standard was only 68% brightness requirement. Paper was full of shives and specks. However, due to continuous improvement in processing technologies, availability of better equipment at various stages both these segments now compete strongly with wood-based paper and there are mills in both recycled and agro-based sectors whose product can easily substitute wood-based paper.

However, my personal opinion is that too much weightage is being given to the brightness of paper which does not matter so much as far as the end user of paper is concerned but only results in usage of higher quantities of chemicals which has its own environmental implications.

Paper users should seriously look into this aspect and brightness should be limited to only such levels which serve the purpose of the end user.

Future of paper industry
Paper industry has shown reasonably good growth over the last 2-3 decades and present total production estimates vary between 21-million tonnes to 24-million tonnes as per different estimates.
The packaging paper sector is contributing more than 60% to the total production, followed by cultural varieties of writing and printing paper, which contribute about 30% and balance is newsprint and other specialty papers like tissues. I am quite sanguine about future prospects of the paper industry in India.

The biggest driver of growth still remains the packaging sector because of the following reasons:

1. More and more emphasis on the manufacturing sector in the country which is a big consumer for the packaging industry.
2. Exponential growth in e-Commerce which consumes significant quantities of packaging paper in terms of secondary packing. It is estimated that packaging paper may grow in double digits in the foreseeable future. In fact during the Covid period also the impact on the packaging sector was minimal, rather demand picked up because more and more deliveries were being done online consuming more packaging material.
3. As far as the writing and printing sector is concerned, worldwide the total demand is either stagnating or going down in certain matured economies. However, my personal belief is that in India this sector will continue to show growth between 3% to 5% per annum in the coming years.
4. The specialty segment would also show significant growth as general standards of living goes up and consumption of tissue paper and likes would also go up correspondingly. Newsprint sector may see a permanent loss in demand because many regular readers of newspapers have shifted to online platforms and may not return to the physical paper.
    

There was a severe setback during the recent Covid pandemic as all educational institutions and offices were shut down and classes were shifted to online platforms. This considerably affected writing and printing paper consumption.

Even now these are opening up very slowly thus there remains a pressure on the demand side; but one thing which has come out in recent experience is that the digital and online education system has severe limitations especially in countries like India. There is a huge digital divide in the country where a large section of society does not have access to high-speed internet and very few can afford multiple digital devices for all the students in the family. Which has resulted in a significant percentage of students dropping out of schools or lagging behind.

Further severe impact on the mental pick up of students has been observed due to lack of physical interaction with fellow students and teachers. Impact on health conditions of students has also been observed because of this factor. Therefore, the importance of the physical mode of teaching has come to the fore and I am sure that going forward, once the pandemic recedes and all educational institutions re-open, the demand for writing and printing paper will show a spurt. I feel, the  implementation of the new educational policy (NEP) will be an added booster.

Fragmented paper industry
As far as the current performance level of various parameters vis-à-vis international standards or standards being achieved in Southeast Asia is concerned, India is a country of big diversity. The mill’s sizes vary from 10 MTs per day to more than 1000 MTs per day. Therefore, if we consider the paper industry in totality one single rule or prediction cannot be applied to the entire sector. There are significant numbers of mills who have already achieved parameters at par with international standards, with a significant percentage still lagging behind but nevertheless most of the mills are making continued efforts to improve the absorption of new technology to improve operating parameters but the fragmented nature of the industry will still be a fact to consider.

Areas of concern
I see three major constraints which are areas of concern for the paper industry in India.

Fibrous raw material
As all are aware that there are three distinction sectors in paper industry:

1. Wood-based industry
2. Agro residues-based industry
3. Recycled-based industry

All the three sectors have significant problems while sourcing fibrous raw material for their use is resulting in the fact that fibre cost in India is one of the highest as compared to other major paper producing countries. In the case of wood-based industry raw material requirement has to be met through social forestry as still no policy decision has been taken regarding provision of degraded forest land to industry for purposes of plantation for raw material requirements. Therefore, prices and availability of wood is always susceptible to vast fluctuation.

In the case of the agro-sector there are significant competing uses of this fibre which generally takes priority over paper industry, for example, wheat straw is used as cattle feed which always would have first charge on its usage. Similarly in case of bagasse, most of the sugar mills prefer to use it as fuel for power generation because of various incentives for power produced from nonconventional fuels. Therefore, availability of this fiber for the agro-sector becomes expensive and uncertain.

In case of recycled fibre also despite recent efforts made by the industry and administration, collection of indigenous recycled fibre remains dismally low as compared to many other countries, thus a significant percentage of fibrous raw material has to be imported which adds significantly to the cost of production. The quality of recycled fibre available in the country is also not upto the mark because fibre used for manufacture of paper in all the sectors has very little percentage of long fibre raw material like soft wood which imparts strength to the paper and in absence of the same the paper has low strength properties than imported paper. Which also necessitates use of imported recycled fibre.

Besides all this, the paper industry faces a very high cost of energy as compared to competing countries and also the cost of capital, despite recent reduction in interest rate, is significantly high as compared to other developed countries.

Besides the above I have already mentioned that availability of skilled manpower still remains an issue with the industry.

Tackling raw material concerns
As far as making available the wood material to wood-based mills is concerned, already various government departments are aware of the matter and some progress has been made in announcing a policy whereby degraded forest land can be made available to the industry in public participation mode for plantation of pulp wood. This must be expedited and in the mean time industry should look into various aspects of going ahead with the plantation process once land is made available.

As far as agro raw materials are concerned, this will remain in short supply because obviously demand for cattle feed cannot be compromised. Sugar mills can be incentivised for supplying bagasse to paper mills because in any case this is a better use rather than burning it for power generation. Already various studies and schemes are going on for increasing collection of recycled fibre but still we have a long way to go.

Managing future course of action
My feeling is that the paper industry has done reasonably well during the last few years barring the year gone by due to Covid pandemic. It is in a position to meet requirements of its Capex through normal internal accruals and banking channels. Though there has been a lot of talk during the last 15 years for creating a Technology Upgradation Fund (TUF) for the paper industry on the lines of the fund available to the textile industry. However, my feeling is that no hope should be attached to the same as the issue has not found favour with the government. As far as foreign investors are concerned, recent experiences of international investors to the Indian paper industry have not been very pleasant and they had to exit after a couple of years of investments.

Therefore, it will be difficult to depend upon foreign investments for the paper industry in India. However, in certain cases strategic investors may step in.

The point is, most of the paper mills will have to cater to the volume market as the specialty market is very limited and only small capacity machines can be utilised for the same. This is not saying that the specialty sector does not have a future but separate capacities will have to be created to cater to this segment while most of the existing machines will cater to only the volume market. Also for the specialty sector, significant dependence on imported wood pulp will remain as indigenous raw materials are generally short fibre pulp which may not be 100% suitable for such a segment and certain support would always be necessary.

Plastic for paper?
A major area which has opened up for the paper industry in recent past is substitution of plastic for packing use including food grade packaging. The government has made it clear that single use plastic would ultimately be banned completely therefore we will have to see a substitute for the same and the paper industry can play a leading role. Already some developments have taken place in packages for pan masala etc.

However, making available the packaging material which is equally efficacious as far as its qualities are concerned and at the same time affordable vis-à-vis normal plastic is a big challenge which the industry will have to take up.
Paper industry reason for deforestation – the biggest myth

Paper industry is one of the most maligned industries in the country whereby a general belief is spread in society that this industry is a major cause for deforestation. Almost every incoming mail would have a byline saying, that “save paper”, “save trees” or print if necessary to save the environment. While as a matter of fact none of the segments of the paper industry uses any forest resources. As mentioned above, even wood-based paper mills use wood sourced from farm forestry only. The industry provides big support to marginal farmers to grow high yield trees and provides financial and technical support. I feel a strong concerted effort will have to be made by the industry and its business constituents to remove misinformation through massive information campaigns which may entail certain financial expenditure.

Secondly, the industry has to improve its environmental performance on a continuous basis so as to improve its sustainability and minimise its carbon footprints. This effort should come as a culture in the industry rather than be governed by the law enforcement agencies. A continuous endeavour to improve quality of end product is another area which might be looked into by the industry as technological upgradations at the user’s end are continuously demanding better and better quality of paper.