Executives and managers who guide paper manufacturing firms based in India can offer a litany of reasons why their jobs are difficult. Working in their favor, however, is a growing middle class and an anticipated 7 percent annual rise in GDP in India in 2015.

From left, Brian Taylor of Recycling Today, P.R. Ray of Esskay Impex and Arun Bijur of SPB Projects and Consultancy.

In a discussion and question-and-answer session at the 2015 Paper Recycling Conference India event, held in New Delhi in late January, a paper trader and an industry consultant offered their observations on the opportunities and challenges facing India’s paper manufacturing sector.

Estimates of how many paper mills are operating in India range up to 800 said Arun Bijur of SPB Projects and Consultancy [http://www.spbpc.com/home.htm], Chennai, India. Bijur, who has nearly four decades of paper industry experience, said access to financing and increasing government scrutiny in areas such as pollution prevention will likely lead to some consolidation.

Fellow panelist P.R. Ray of Esskay Impex, Kolkata, India, said family-owned papermaking companies will remain part of the landscape in India. “Personally, I do not see the end of fragmentation of family businesses,” said Ray. He added, however, that the paper sector in India is suffering from a low level of investment in plant and equipment, since institutional investors “do not find themselves interested in investing in this sector.”

Bijur commented that if the quality of recovered fiber declines both overseas and within India, mills that can invest in new stock preparation systems may elbow out some competitors. “Given a disparity between mills that can accept lower quality materials and those that cannot, we can expect that some smaller or vintage mills will go out of business. That is a way the industry can progress,” he remarked.

Compared to North America and Europe, India enjoys a growing print media market, both panelists agreed. India’s growing literate population enjoys its access to regional newspapers in a wide variety of languages, noted Bijur, and the income of these newspapers is bolstered by the placement of mandatory government and private sector announcements.

Ray noted that print media revenue in India is not merely fighting to stay level as it is in the West, but rather has grown by a double-digit percentage in the last 10 years.

Regarding packaging grades, Ray said India is experiencing rapid growth in kraft paper production rather than seeing major investments in containerboard mills. Unless India becomes a more vigorous manufacturer of exported goods, that trend may continue, since India relies largely on kraft grades for products made for internal consumption.

Paper Recycling Conference India was held Jan. 29-30 at the Taj Palace Hotel in New Delhi.

In the Indian steelmaking sector, the basic oxygen furnace (BOF) plays the major role at facilities large enough to be called a mill.

However, according to Jitendra Singh, president of the All India Induction Furnaces Association (AIIFA), New Delhi, BOF mills make only slightly more than half of the finished steel in India each year. The majority of the rest of the steel is not made by electric arc furnace (EAF) mills, but rather by smaller-volume induction furnace shops.

The AIIFA estimates there are more than 1,300 induction furnaces installed in India, said Singh. Ferrous scrap has traditionally been “imported individually by each consumer to meet their requirements,” he added.

At a presentation at the 2015 Metals Recycling Association of India (MRAI) meeting in Mumbai in February, Singh said these induction furnaces can melt either direct reduced iron (DRI), also known as sponge iron, or ferrous scrap. Melting scrap can offer several advantages, said Singh, however “there are only 18 million metric tons of ferrous scrap collected in India” each year.

With installed induction furnace capacity of more than 30 million metric tons in India, that scrap figure indicates a shortfall even before the scrap needs of India’s BOF or EAF sectors are considered.

Subsequently, DRI “became the main feedstock” for the induction sector, Singh told MRAI delegates, although scrap has gained ground and is nearing the 50% level, he added.

Singh said the production of DRI requires more energy and creates slag. DRI itself has a limited life span before it degrades and can potentially harbor smoldering fires. Currently, many steelmakers are exploring setting up “mini pellet plants” to create DRI pellets made from iron ore fines, he noted.

If scrap processors in India can seek out and find additional ferrous scrap, commented Singh, induction furnace operators will have an interest in using it.

The 2015 MRAI International Conference was February 5-6 at the Renaissance Mumbai Convention Centre and Hotel.

India’s metal recycling rates are believed to be considerably lower than those in North America or Europe. An influx of vehicles on India’s streets and highways, however, should lead to more metals recovery in the years ahead.

Several speakers at the 2015 Metal Recycling Association of India (MRAI) International Conference, held in Mumbai in February, referred to India’s growing sales figures and production numbers in the vehicle sector as a factor in the scrap recycling industry’s future.

The millions of vehicles that have been streaming onto India’s roads in the past several years includes trucks, cars, motorcycles, scooters and three-wheeled auto rickshaws.

Although drivers in India are likely to extend the lives of vehicles until they cannot be driven another mile, the sheer number of additional vehicles hitting the road each year will lead to a greater number of end-of-life vehicles (ELVs) in India in the next five to 10 years,

Mohan Agarwal of India-based aluminum producer Century Metal Recycling told MRAI delegates that India has risen to become the seventh largest automaker globally and the second largest producer of two-wheeled vehicles (motor scooters and motorcycles).

Presenter Goto-San from Toyota Tsusho India Pvt. Ltd. said his company’s forecasts show India’s passenger vehicles sales may zoom from 2.2 million vehicles sold in 2010 to 4.6 million units in 2015 and then 10.6 million units in 2021.

The ELVs will become “an important part of urban mining resources in India,” said Goto-San, adding that for Toyota Tsusho and other companies, “the opportunities in India are promising.’

A stream of ELVs in India would be a welcome development for recyclers. A study conducted for the MRAI by Frost & Sullivan and summarized at the February meeting by Venkatesan Subramanian, who works for that research firm in New Delhi, found that India’s current scrap iron and steel recycling rate could be as low as 12%, while its copper and aluminum recycling rates are at 45 percent and 50 percent respectively.

The 2015 MRAI International Conference was February 5-6 at the Renaissance Mumbai Convention Centre and Hotel.

Starting with customs duties paid for inbound scrap, metals recyclers and producers in India say their industry cannot gain momentum or even operate profitably until the government reconsiders its policies.

Throughout two days of programming at the 2015 Metal Recycling Association of India (MRAI) International Conference, held in Mumbai in February, speakers and audience members returned regularly to the topic of India’s tax structure.

“India is the only country in the world where there is an export duty on scrap and an import duty on scrap,” stated MRAI President Ikbal Nathani of Mumbai-based Nathani Industrial Services.

Nathani, a ferrous scrap trader, pointed to a flood of low-priced steel billets pouring into India as a symptom of the import duty on scrap. “Now China is dumping billets [at] the price of our scrap,” he stated.

Speaking to government ministers in attendance, Nathani remarked that one year ago at another MRAI event, a government spokesperson had promised “that help will be given.” One year later, the import duty still in place, “Next year this industry will absolutely shut down,” if the duty is not repealed, Nathani declared.

An overview of the tax regimen faced by the metals sector in India was given by attorney Badri Narayan of New Delhi-based Lakshmikumaran & Sridharan. The attorney pointed to the customs duties of 2.5 to 5 percent; an excise duty for manufacturers; a service tax, a sales tax and a special duty additional (SAD) customs fee for importers that, in theory, is refundable.

The SAD was conceived as a “means to offset the sales tax,” said Narayan, but instead it has become “a really painful process” for importers to receive their refunds. The SAD process hurts cash flow for importers of scrap. “It’s a real problem this industry is facing,” said Narayan.

Relief from some of the paperwork might be on the way if a proposed combined tax regimen results in a comprehensive GST (goods and services tax), said Narayan. However, the burden that business owners would still face becomes clearer based on the 24 percent proposed GST tax rate.

One of the conference’s final speakers, Anupam Prakash from India’s Ministry of Steel, said of his department, “We’re always there and you can raise your issue and we’ll definitely work toward a solution.” MRAI members are anxious to see if those solutions will be in place before they next meet.

The 2015 MRAI International Conference was February 5-6 at the Renaissance Mumbai Convention Centre and Hotel.