More than 125 artisanal paper mills in Gujarat and Maharashtra, with a combined annual turnover of Rs 12,000 crore, are set to close due to a sharp increase in the cost of raw materials (used paper) and of their inability to pass on the increase. to consumers due to cheap imports from ASEAN countries under the Free Trade Agreement (FTA).
India and China depend on importing waste paper from abroad for recycling. However, due to the increased consumption of waste paper in the world market, raw material prices have increased by 35%. As a result, the paper mills lost Rs 6 per kg.
“If this is not resolved and the deficit is not closed, more than 125 artisanal paper mills in Gujarat and Maharashtra, with an annual turnover of Rs 12,000 crore, would be forced to close. The industry has been facing a severe recession for a long time. Units in Gujarat and Maharashtra import 2 million tonnes of waste paper. However, with the increase in the use of waste paper in the United States of America for recycling instead of virgin fibers, imports of waste paper in India and China have declined. Waste paper prices have increased 35% in the past two months, ”said Sunil Agarwal, president of the Gujarat Paper Mills Association.
Chinese factories have raised prices for ready-made products by Rs 7,000 per tonne over the past 2-3 months. So China can afford to pay $ 50- $ 60 more for importing waste paper from West America, Europe and the Middle East. Local US factories have already raised their prices by Rs 4,000 per tonne for ready-made products and may increase them by an additional Rs 3,500 in the near future.
Mills in the United States buy American waste paper at higher rates. This results in a 35 percent cost increase for waste paper imported into Indian factories. In addition, there is a further 12% increase in cost due to the higher exchange rate. The exchange rate, which was previously Rs61 against the dollar, has now risen to Rs 68.50 over the past 3-4 years.
“There has been a substantial 25-35% increase in costs incurred by paper mills due to the increase in imported paper waste, local waste, coal, chemicals, wages and electricity. To make matters worse, over the past three years Indian paper mills have had to cut prices by 12-15% despite rising input costs. The paper mills do not even realize the cost and have suffered heavy losses. It has been estimated that these factories will have to increase the price by Rs 6 per kg, otherwise they will not survive and may have to close. This could result in the closure of around 125 paper factories and the unemployment of around 40,000 workers, which in turn will result in a heavy loss to the public purse, ”said Prakash Rathi, chairman of the Maharashtra Paper Mills Association.