Producers of corrugated boxes in South urge Centre to ban export of kraft paper – The Financial Express

Clipped from: https://www.financialexpress.com/industry/producers-of-corrugated-boxes-in-south-urge-centre-to-ban-export-of-kraft-paper/2210843/

G Nagaraj, president, SICBMA, said that the corrugated box industry is eco-friendly as it uses biodegradable kraft paper as the main raw material.

Kraft paper is the main raw material in the production of corrugated boxes and its supply has shrunk by over 50% in the local market in recent months, hitting production, and threatening to send hundreds of SMEs in Tamil Nadu and Puducherry packing.

South India Corrugated Box Manufacturers’ Association (SICBMA), the industry body representing the manufacturers of corrugated boxes, 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 and its supply has shrunk by over 50% in the local market in recent months, hitting production, and threatening to send hundreds of SMEs in Tamil Nadu and Puducherry packing.

Corrugated box (also known as carton box) is a key packaging material for pharma, FMCG, food products, automobiles, electrical appliances, among others. Tamil Nadu and Puducherry have close to 2,000 manufacturers — predominantly micro small and medium enterprises, of corrugated boxes. 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 leaving Indian shores for export markets, leaving the local industry high and dry. The severe shortage, coupled with an unprecedented 65% increase in the price of kraft paper, has pushed the manufacturers to the brink of closure.

G Nagaraj, president, SICBMA, said that the corrugated box industry is eco-friendly as it uses biodegradable kraft paper as the main raw material.

There are about 2,000 units in Tamil Nadu and Puducherry engaged in the manufacturing of corrugated boxes. They employ nearly 1 lakh people –about 60% of them are women. The cost of kraft paper typically accounts for 85 % 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 corrugated boxes has risen by 60%.

He added that being in a highly competitive sector, producing an essential packaging product, the box manufacturers work on a very thin margin. Most industries can neither accommodate the sudden rise in the raw material cost nor pass it on to the end customers. Unless export is banned and supply of kraft paper is ensured, many industries will have to wrap up their business.

“We are being sandwiched between kraft paper mills and the customers of corrugated boxes, most of whom are big corporates,” he said.

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