The paper industry in India is more than a century old.  Commercial production of paper started as early as 1879.  Limitations with respect to forest-based raw materials forced the Indian paperindustry, in these early stages of the development, to utilise non-conventional materials.  India was the first country in the world to have a paper mill which relied entirely on bamboo as its primary fibre.  Following this example, various other non-conventional raw materials were introduced such as straw, bagasse, textile and waste paper.  Throughout the century, this development was strongly supported by the Indian government (Rao 1989).

At present, several developments and problems prevail in the Indian paper cycle.  First, with the prospect of growing urbanisation, increasing literacy rates and general increasing economic growth, the consumption of paper and paperboard products is expected to grow considerably in the coming years.  The Indian citizen on average consumes approximately 3 kg of paper each year.  Although low compared to the annual per capita consumption of paper in Japan and the United States which is respectively 234 kg and 298 kg, this figure is expected to increase over the coming decades (FAO 1993).  Moreover, it should be realised that the official statistics do not account for the consumption of re-used paper.  Therefore, the actual per capita paper consumption in India is slightly higher.

Second, the lack of foreign currency has forced the Indian government to strive for self-sufficiency in paper production.  Throughout the years, dependency on imports of most types of paper and pulp has decreased.  Today, only newsprint is still being imported on a substantial scale.  On the one hand, this was achieved by imposing import constraints on final paper products as well as raw materials.  On the other hand, various incentives were provided to the paper industry to increase production. As a result of these developments, India, after China, accounts for the largest number of paper mills in the world.  Paper is produced at all scales, varying from handmade paper units to large scale integrated mills.  However, despite government support, the overall performance of the industry is low with a constant decrease in capacity utilization.  In the last decade the Indian government adopted a number of measures to improve efficiency.  Not only were foreign producers allowed to enter the Indian consumers’ market, they were actually allowed to become established in India itself.  Also, various import constraints are now being lifted such as the decrease in import tariffs for pulps, paper and paper board.

Third, the Indian paper industry is traditionally suffering from a lack of raw materials.  Forest is not an abundant natural resource in India.  In 1993 only 19.5% of the total land surface was covered with forest (FAO 1993a).  Due to alternative land-uses such as crop production and hydroelectric projects, the forest in India is declining rapidly at an annual rate of 0.6% (World Resources Institute 1994).  Another factor which limits the indigenous supply of wood-fibre is the low productivity of the Indian forest.  While forests in Europe and the US increase approximately by 2.5 m per hectare each year, the Indian forests grow no more than 0.5 m per hectare (Rao 1989).  This shortage has promoted the utilization of non-conventional raw materials.  The share of wood-pulp based paper has declined from 65 per cent in 1985 to 49 per cent in 1992, while the share of agro- pulp based paper increased from 22 per cent to 29 per cent during the same period. The sharpest rise has taken CREED Working Paper Series 10 5 place in the share of waste paper production which has risen from 13 per cent to 22 per cent over the same period (Khanolkar 1995).

Fourth, the environmental profile of the Indian paper industry is not very positive. Energy consumption is relatively higher than the international standard, due to interruptions in production, the poor quality of fuel and equipment, and the relatively low rate of waste paper utilisation in the production.  Even more important is the environmental impact of water pollution and consumption. Pollutant emissions in the waste water are generally higher than the international average and water recycling systems are only slowly making their entry in the Indian paper industry.  Similar conclusions can be drawn for air emissions and solid waste.  The Indian government recognizes the significant pressure of the paper industry on the environment and has intensified the enforcement of environmental regulations.  This has forced many paper mills to switch from the polluting agro-based raw materials to waste paper which causes much less pollution.  Alternatively, effluent treatment plants have been installed.  Nevertheless, especially the small-scale units lack the funds to improve their environmental performance and therefore are threatened with closure.

Fifth, not only are conventional raw materials becoming increasingly scarce in India, waste paper and agro-residues are also in limited supply.  The yield percentage of agro-residues fibres is rather low (33% for bagasse and 38% for straw).  The low productivity has to be weighted against the transportation element of this commodity.  It is reported that the economic distance for hauling the straw is 50 kilometres from the mill although examples of a radius of 100 km are not uncommon (Roberts 1995).  In the case of waste paper, the intensive use and re-use of paper in India often decreases its quality which makes it less suitable for recycling.  As a result, international supply in the Indian paper cycle is proving to be more important.  While in 1975, only 4% of the Indian paper originated from imported waste paper, this rate had increased to 12% in 1994 (Beukering  et al. 1996a).

Finally, an important development in the Indian paper cycle is the rapidly increasing problem of waste.  Rapid urbanisation and economic growth increase waste and at the same time reduce the available landfill space.  Although paper is less important in waste in developing cities than in industrialised countries, it still comprises a significant part of  the volume. Because of inefficiencies and limited municipal budgets, a large share of the waste remains uncollected causing sewerage blockage and visual and odour pollution.  Inappropriate waste management leads to a number of societal problems, such as increased risks of epidemics, air pollution caused by illegal waste burning and pollution of groundwater.  These problems emphasise the importance of the informal waste recovery sector which operates in most Indian cities.  In Bangalore, a growing urban centre, it hasbeen estimated that 15% of the municipal waste is diverted from dumpsites because of recycling activities (Baud and Schenk 1994).  Despite these positive contributions to urban waste management, waste recovery receives little attention from most municipalities (Beukering et al.1996b).  This may be explained possibly by the lack of insight into the socio-economic and environmental benefits of recycling throughout the life cycle of different materials.  The development of a material flow model of a secondary material can serve to improve this understanding.