DEFINING THE INDIAN MARKET | FOR PULP, PAPER AND BOARD

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Background to the report

India is often presented as the “next China”, referring to its possible future impact on the global economy, as a magnet for investment and as an engine of growth. However, the two countries probably have much less in common than is often thought. The demographics are very different; India’s population is much younger, and poorer, than China’s and is aging less rapidly, and the income inequalities in India are arguably even more pronounced than in China.

The structure of the two economies are also very different. The true origin of China’s growth is open to debate, but an effect has been the rapid development of an export-oriented manufacturing sector. India’s economy is developing along different lines, with a much greater emphasis on the service sector.

The political and legal structures in India and China are also substantially different: India is a vibrant democracy, albeit one with a lingering affection for a socialist past, whereas in China the Communist Party exerts strict political control while simultaneously adopting a more laissez-faire attitude to economic management.

These factors have influenced the different economic roads that the two countries have followed. Historically, India has been politically suspicious of foreign investment, erecting barriers designed to protect local companies, whereas China has welcomed foreign investment as a means of invigorating its moribund state sector. Local politics in both countries are distressingly corrupt, but India has a clearly more stable and functional legal system which in turn contributes to its objectively better record of corporate governance.

Given these very different economic and political backgrounds, it is not surprising that the pulp and paper industries of India and China have developed along separate lines. Without a large export-oriented manufacturing industry to provide for, India’s production of packaging and printing paper — particularly of high quality grades — is far lower than China’s. There has been no rush to invest in indigenous papermaking capacity capable of producing paper of internationally acceptable standards, nor to date has there been the same need for primary woodpulp or recovered fibre.

On the other hand, the vitality of political debate in India means that the demand for newsprint and some publication papers is substantially higher than China’s, certainly on a per capita basis.


The purpose of the report

India’s paper and board industry is still at a relatively early stage of development, approximately where China’s was around 10-15 years ago. Production is fragmented and inefficient. Although investments are taking place, these are mostly small scale.

As the Indian economy expands, there is an increasing requirement for higher quality paper and board, yet at the moment there is little prospect of the Indian industry being able fully to meet this demand. As a result, imports account for an increasing share of India’s paper and board demand. Admittedly, the total volume is still small in relation to Chinese imports, and imports are dominated by newsprint, but a distinguishing feature is that while Chinese import demand for several grades is now shrinking, India’s import demand is still growing and is likely to continue doing so at an accelerating speed.

A similar pattern is evident in the markets for fibre. With negligible indigenous pulpwood resources and limited good quality recovered fibre resources, India will continue to be dependent on imports for much of any growth in domestic fibre demand.

The purpose of this multi-client report is to provide a detailed analysis of the Indian market, its current structure, its future prospects and the opportunities it offers to potential suppliers.


Availability and Cost

The study was published in January 2008 and is available now at a price of £3,800.

Subscribers to our Defining the China Market 2007 report benefit from a reduced price of £2,750. This price includes printed and PDF copies of the report, a PowerPoint file, and a presentation meeting with the authors in London. If a meeting is requested elsewhere a charge may be made for staff travel and subsistence costs. Hawkins Wright will also respond to enquiries relating to the report and provide updates throughout the course of the year.

Please contact Tom Wright or John Bingham for more information. Alternatively just use this enquiry form.

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