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Indian economy started promoting for paper less economy since Mr. Narender Modi took reign of PM. The entire system was processed towards digitalisation as the government also started sending notices and challans over email Id or at different digital platforms instead of sending paper document via speed posts. In fact, people have also shifted their accounting and book – keeping process on different software systems such as Tally Prime, Tally ERP, Busy etc. Resulting the fact, that the demand of paper became less in the market, due to which the paper mills of India started losing businesses.

According to CK PAPER MART, the twisting fact is that, the demand of prime Kraft paper has been decreased as now the people are no more using paper for writing purposes but the demand of brown kraft paper has been increased into packaging business. There are other types of paper such as White bleach kraft paper, SBS etc. are also one of the prominent part of packaging industry. The kraft paper is demanded for manufacturing of carry bags, corrugated boxes, honeycomb manufacturing for packaging etc. India is having two different segment of packaging papers, firstly, India is having more than 900 paper mills, which are into manufacturing of kraft paper or packaging paper. Secondly, a large segment of packaging kraft paper is also imported from USA and Europe, which is better in strength and quality as compared to Indian kraft. During last two years, i.e., 2021 and 2022, the export of kraft paper was too high due to which hundreds of new paper mills were started but now, most of them are hit by global recession and are almost at the urge of shut down. The paper mill owners of Uttar Pradesh and Uttarakhand are agreeing that, due to low demand, global recession and rising inflation level, they have to take harsh decision of closure of the production processes and the during the first quarter of 2023, more than 20 mills have been completely shut down affecting the livelihood of more than 26000 people in India.

The managing director of prominent paper mill stated that they have closed down the production related activity during April and May 2023 because of lower demand. Other than paper mills of Uttar Pradesh and Uttarakhand, paper mills of Punjab, Haryana and Rajasthan were also closed down as the global crisis and steep inflation rate impacted the consumption process of kraft paper. The President of ‘The Indian Recovered Paper Traders Association (IRPTA) mentioned that the entire situation of mill shut down arose because the kraft mills are making huge losses as they were working only on gap of INR 8 to INR 9 per kg against waste paper and finish paper. In simple terms, the prime paper produced by Indian mill manufacturers were selling just say the price of Rs. 15, which is of good quality then the stocklot paper imported from overseas have been sold at the price of Rs. 7, despite the fact that quality of stocklot paper is equivalent to waste paper.

At the time duration of closure of the Kraft paper mill, the waste of Kraft paper was actually being sold at INR 17000 per metric tonnes which was of 18 BF and 100 GSM whereas the prime Kraft Paper was being sold at INR 25000 per metric tonnes which was also of 18 BF and 100 GSM and this nominal gap was not enough to match with growing losses. The prominent paper mill from Uttarakhand mentioned that the demand of kraft paper is quite short throughout the globe whereas the inflation rate is also higher. Earlier, India was exporting lot of packaging products such as corrugated boxes and Paper Carry Bags. But now, due to low overseas demand, the corrugated box manufacturers were also not operating at full capacities. Although, the mill owners are hopeful that the global market might pick up within next two quarters as the shutdown of mills would correct the prices of kraft paper.

Kraft paper is basically a kind of recycled paper and it is no longer remained monopoly of Indian and Chinese mills because the paper mills of developed countries have also installed the recycling plants and they are also offering good quality kraft paper at the prices lower of Indian mills due to which the Indian paper mills are not been able to compete with international paper mills. The paper mills of Russia and Malaysia are offering the kraft paper at prices lower than 20% as compared to the prices offered by Indian paper mills. The fact cannot be denied that, during year 2022 the paper import was 2802.38 USD Million and same was just 742.45 USD Million in year 2021, indicating that the people of India themselves are also preferring to use imported kraft paper instead of Indian kraft because of prices and quality. In last two years, the production capacity of kraft paper has been expanded by 40% in proportion of the demand whereas the actual expansion required was just between 18% to 20%. In order to match with demanded capacity, the paper mill association have been agreed to shut down their production process for five days every month in order to equalise demand and supply.

In 2023, the paper mills of India have suffered huge losses, due to which the paper mill association of Uttarakhand, Uttar Pradesh, Punjab, Haryana and Rajasthan have formed cartel and have decided to follow the business pattern of Paper mills of Foreign countries. The paper mills operating in northern areas are also planning to shut down the operating for five days in month as like paper mills of South and Western India.

There are different types of Kraft paper manufactured by Paper Mills, such as Virgin Kraft, Bleach Kraft, Poly Craft, Absorbent Kraft Paper, etc. and these kraft paper are used for different purposes. The paper mill from Punjab has also been shut down in order to manage their existing stock as the paper mill was going to through difficult time. The corrugated box manufacturers have received 20% lesser orders as compared to previous year. Although, the chances of demand could be possible from Indian market as the demand of corrugated boxes from Himachal Pradesh rises during May and June because of seasonal aspect as the boxes for Apple packaging were in high demand. But the existing corrugated box manufacturers were not prepared for this and could not determine the size of boxes and were not been able to fulfil the orders.

While the export of Kraft paper from India has been concerned then the packaging paper are also being exported as during 2020, the floating medium and test liner export was approximately 2 lakh tones each month and it remained continued till several months. Although, the export processes started declining in 2023 because of certain issues such as bad odour from Indian kraft, improper logistics, run ability and sub – standard quality. It is recommending to kraft manufacturing mills, that, if these issues can be curbed then it will act as huge opportunity for packaging industry. India was exporting kraft paper into Far East, Middle East, Latin America and African countries. The export could have been possible in 2020 and 2021 because of compulsion and necessities, not because of choice.