India needs a vision and a long-term strategy to help any segment to emerge globally competitive with a large volume of production. Sugar mills can create capacity for 3 million tonnes of newsprint, based on bagasse. This can make India a large producer with competitive price advantage.
The budget has proposed a 10 per cent customs duty on newsprint. Quite expectedly, the Indian Newspaper Society (INS) has appealed to the government to withdraw the tax on newsprint, uncoated paper, used for printing newspapers and lightweight papers used in magazines. INS pointed to newspapers and magazines already under severe financial pressure due to dipping advertisement revenues, higher costs and digital onslaught from technological giants.
The Society, an informal cartel of large newspapers, shed some tears for the lesser endowed: “small and medium papers will go into deeper losses and many of them will be forced to close down.”
The society of by and for large newspapers
While I am happy that the society of, by and for large newspapers, expressed this concern, in a way these have been making their own contributions by several unfair trade practices like cutting advertisement rates, offering hefty discounts and price wars.
For decades IE has been pointing to the lack of responsibility on the part of the newspaper industry to extend its resources and expertise to help India emerge a large producer of newsprint.
The annual consumption of newsprint is estimated at 2.5 million tonnes and domestic capacity is only a million tonnes. The country doesn’t have any capacity for uncoated, glazed and lightweight paper, which are totally imported. While efforts were made within the country to produce quality newsprint, newspapers, even those that enjoyed monopoly status in specific regions, did not bother to support this. They made use (abuse) of the clout enjoyed by these with the government to switch to imports, unmindful of the severe impact on the domestic manufacturer created at a high cost. I cite an interesting instance:
TNPL that pioneered large production or newsprint from bagasse.
In the 1980s Tamil Nadu Newsprint and Paper Ltd (TNPL), a Government of Tamil Nadu undertaking, led by the genius of business leader S Viswanathan, conceived and implemented production of newsprint and paper from sugarcane bagasse. On his ingenious counsel, TNPL set up at its cost coal-fired boilers at six private sugar mills, collected the bagasse and perfected the technique for production of high-quality paper and newsprint. In quick time the quality was acceptable to even newspapers like Economic Times and Financial Express.
The business was extremely profitable for over three decades… TNPL emerged among the largest producers of papers and boards. Presently it has the capacity for production of 600,000 tonnes.
But how this initiative got killed…
Large newspapers didn’t have any qualms in ditching TNPL, the company which brought about a technological revolution in establishing production of high-quality printing paper and newsprint from the renewable resource of bagasse. TNPL stopped production of newsprint and switched wholesale to the more profitable printing paper.
Sadly, the lack of policy by the government killed this initiative on newsprint: international cartels dumped newsprint at low prices. The government, pressurised by the newspaper lobby, refrained from taxing newsprint that resulted in the closure of newsprint production at the highly successful TNPL.
India can emerge large newsprint producer
I outline a plan for achieving global stature and competitiveness in newsprint:
India imports 60 per cent of its newsprint requirement and the print media monopolised by a few business houses, has been zealous in opposing any attempt to rationalise consumption.
Tamil Nadu is a small producer of sugarcane; it accounted last season for just 1.35 per cent of total production. Large producers like Maharashtra, Uttar Pradesh, Bihar, and other sugar-producing states can emulate the successful TNPL in using bagasse to produce paper and newsprint. With little nudging by the government in terms of tax incentives, bagasse can be saved from being burnt as fuel in millions of tonnes and diverted for the production of newsprint. India has the potential to produce high-quality newsprint and fine writing paper based on bagasse. With parallel research, this can be expanded to include other agricultural waste products like straw. At such high volumes, costs can become competitive.
Sugar mills can create capacity for 3 million tonnes of newsprint, which can make India a large producer with competitive price advantage.
The problem of India vis-à-vis China relates to the scale of production. Newsprint is an area where such volume can be built with ease and TNPL has the technical and decades of experience. Competition from China merely on the scale of business killed several industries of India, eg. calcium carbide, antibiotics (penicillin)… When China produces in lakhs of tonnes, in India the capacity is in few thousand tonnes split over several units.
On its part, the government can offer special incentives in the form of capital subsidy and other concessions for some ten years as also assured supply of coal, power, and other needed infrastructure.
India needs a vision and a long-term strategy to help the segment to emerge globally competitive with a large volume of production. On the part of the newspapers that are never shy of proffering free advice, they could be more nationalistic.
