BUSINESS

Roadblocks to Make in India drive

Allowing commercial forestry on dry and wastelands and giving incentives to industry to develop forestry mechanisms are the need of the hour.

Allowing commercial forestry on dry and wastelands and giving incentives to industry to develop forestry mechanisms are the need of the hour.  

Free trade pacts have made imports cheaper for many segments of the Indian industry. But they are now perhaps becoming impediments in Prime Minister Modi’s Make in India initiative, as certain sectors such as paper industry are feeling the heat of the cheap imports of key raw materials enabled by these trade pacts. This is happening at a time when the country’s green laws bar paper manufacturers from taking up farm forestry projects for accessing the same raw materials indigenously.



Admitting that reduction in import duties under various regional FTAs especially with ASEAN, impacts the profitability of the domestic paper and paperboards industry and erodes the economic viability of small paper mills, Kurush Grant, ITC Executive Director, said, “FTAs are beneficial and they are here to stay.. but some policy changes are needed to further Prime Minister Modi’s Make in India initiatives as India has the necessary skills for the composite development of wood-based industries.” He felt that allowing commercial forestry on dry and wastelands, giving incentives to industry to develop forestry mechanisms and incentives for developing fallow land were the need of the hour. ITC has spearheaded a large-scale afforestation programme, which covers over two lakh hectares, creating nearly 90 million person days of employment.



During 2014-15, ITC’s paper, paperboard and packaging segment was impacted by the continuing slowdown in the FMCG industry and segments revenue and profits rose only at a muted rate. Mr. Grant does not see any major threat to the paper consumption in India arising from the ongoing thrust on digitalisation, saying that vast swathes of the population remain outside the ambit of such initiatives.



“Moreover movements such as SarvaSikhsha Mission provide a very good base for building consumption for paper for education materials. “Market for education and stationary will grow” he said.



ITC’s paper exports too are large, with its packaging materials finding markets among end-users in Europe, the U.S., the SAARC countries and in the ASEAN region too.



ITC has three paper-making units — one at Bhadrachalam in Telangana making paper, paperboard, one near Coimbatore in Tamil Nadu for making packaging materials and another in Triveni in West Bengal for making speciality paper. Around 20 per cent of its output is used internally. The company meets its raw material requirements through farm-forestry, pursuing business through an integrated model.



Mr.Grant believes that wood-based industries can add significantly to India’s GDP, employment potential, farmer incomes and greening India. However, the furniture segment is slowly shrinking due to raw material shortage. This is also impacting India’s skilled artisans and craftsmen and the country is now importing not only the basic raw material but finished products too.



He, however, denied that ITC, which has progressively diversified into non-cigarette FMCG segments, is planning any entry into furniture segment.

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