Rising cost of kraft paper, shortage due to exports, push local industry to the brink
The South India Corrugated Box Manufacturers’ Association (SICBMA) has urged the Centre to impose an immediate ban on the export of kraft paper in any form. Kraft paper is the main raw material in the production of corrugated boxes. Export of the Kraft paper has shrunk the supply by more than 50 per cent in the local market in the recent months.
The corrugated box industry uses biodegradable kraft paper as the main raw material. There are about 2,000 units – comprising mostly of micro, small and medium units – in Tamil Nadu and Puducherry engaged in the manufacturing of corrugated boxes. They employ nearly 1,00,000 people – about 60 per cent of them are women.
Though the demand for the boxes is steadily growing post Covid-19, the manufacturers are not able to ensure supply, as thousands of tonnes of kraft paper are exported, leaving the local industry high and dry. The severe shortage, coupled with an unprecedented increase in the price of kraft paper, has pushed manufacturers to the brink of closure.
“The cost of kraft paper typically accounts for 85 per cent of the production cost of corrugated boxes. With the steep rise in the price of kraft paper, triggered largely by the export-led shortage, the cost of manufacturing of corrugated boxes has risen by 60 per cent,” said G Nagaraj, President of SICBMA.
Most of the box manufacturers can neither accommodate the sudden rise in the raw material cost nor pass it on to the end customers as units work on a very thin margin.
“Unless export is banned and supply of kraft paper is ensured, many industries will have to close their units. We are being sandwiched between kraft paper mills and the customers of corrugated boxes, most of whom are big corporates,” he added.
Corrugated box (also known as carton box) is a key packaging material for pharma, FMCG, food products, automobiles, electrical appliances, among others.