Newsprint crunch: Are Indian newspapers staring at a crisis similar to Sri Lanka?

Amid an economic meltdown in Sri Lanka, two prominent newspapers were recently forced to shut and several others reduced pages due to lack of paper, as costs soared and imports became difficult. The newspaper sector in India, many believe, has been staring at a somewhat similar crisis.

Leading Indian newspapers such as Telegraph and Times of India have been hit hard with a shortage of newsprint, though the reasons are slightly different than Sri Lanka’s. And some have trimmed pagination and compromised on quality to overcome the challenge.

The industry at home depends on less than 50 percent domestic production of newsprint. But imports have been affected by the war in Ukraine and the pandemic-exacerbated container crisis. Domestic manufacturing, meanwhile, has barely kept up with the quality of imports due to low demand and supply, unavailability of raw material, dated equipment, and higher production costs.

Mohit Jain, Indian Newspaper Society’s president, believes that newspapers in India might meet the same fate as in Sri Lanka if the conditions ailing the industry continue to prevail.

Dealing with the crunch

Of the 2.2 million tonnes per annum (MTPA) consumption of newsprint in India, imports constitute 1.5 MTPA, according to the Indian Newsprint Manufacturers Association website. Jain said that 45 percent of imports come from Russia and 40 percent from Canada. According to trade intelligence website Volza, Russia is also the leading exporter of newsprint globally and exports most of its newsprint to India.

The leading newsprint buyers in India from Russia are the DB Corp Ltd, informally known as the Dainik Bhaskar Group which runs 66 editions in four languages, Jagran Prakashan Limited, and Lokmat Media Pvt Ltd.

While Times of India reported that one of the “unintended consequences” of the Russia-Ukraine conflict has been a near vanishing of newsprint from the Indian market, Jain said it is not the only reason.

Telegraph CEO Dhruba Mukharjee said, “We are sourcing from our usual partners in North America and Eastern Europe as well as our domestic partners like Emami and Khanna. The shortage along with the container crisis has pushed up prices which has impacted us on the cost side. We are having to have a very close focus on calibrating our pagination as well as to control wastage to manage the stock usage.”

He said they would continue to closely monitor the supply situation and decide on the “buying strategy based on short term and long term outlook to prices”.

In Europe, the European print and digital communication federation, Intergraf, said in a statement that paper prices have risen by 45 percent – and newsprint by as much as 80 percent – in the past six months. Intergraf, which represents 20 national printing federations, has thus urged stopping exports of pulp and paper to “third countries” to safeguard Europe’s printing and publishing industries.

Jain also pointed to a heavy financial burden on publishers. As Times of India reported, the scarcity in newsprint supplies has doubled the price of imported newsprint to about $950 per tonne from $450 per tonne in 2019. He said the five percent customs duty on imported newsprint is behind additional pressure, even though this was brought down from 10 percent in 2020.

According to a response to a question asked by Vallabhaneni Balasouri in the Rajya Sabha in 2020, the ministry of information and broadcasting said it had received representations from various newspaper industry associations such as the Indian Newspaper Society, Indian Languages Newspaper Association and major media houses for withdrawal of 10 percent basic custom duty imposed in the Finance Bill 2019, on newsprint uncoated paper (glazed) and light-weight coated paper used to print newspapers and magazines. The finance ministry decided to reduce it to five percent after considering all factors, including the needs of domestic newsprint manufacturers.

Jain said, “Newspapers, like Times of India, have cut down on editorials, and are running on low inventory. There is a lowering of quality, rationalising editorial columns and reduction of pages in the newspaper. These are the ways in which newspapers are dealing with the shortage.”

Talking about the long term impact of the situation, Jain said, “Ultimately people will have to shut down their print editions, because if there is no paper, what will they print on? The domestic capacity is 50 percent only and if the shortage continues, the prices of newsprints will increase. Currently the price of newsprint is touching 1,000 dollars per tonne and India needs about 1.4 million tonnes annually.”

Behind the shortage in India

Jain pointed to two aspects – domestic and global.

He said domestic production of newsprint has always remained 50 percent or lower of the total consumption. “During the pandemic, the capacities for manufacture in India and globally have further shortened. Mills that produce newsprint have also shut down. Due to this domestic shortage, publishers depend on imports.”

He also referred to a global series of events. Different countries were recovering from Covid at a different pace and with the world being interconnected through the supply chain, there was a severe mismatch due to varied infrastructure needs, he said.

“Somewhere there was fibre but not coal. In other places, there was a shortage of containers. Even India had a severe coal shortage in October last year. In May last year, when the Ever Given ship was stuck for a week in the Suez canal, it created a backlog of 20 days. When we thought that things would start getting better, the Russia-Ukraine conflict started on February 24. Before that, on February 14, there was a truckers’ union in Canada, after which the Canadian PM invoked an emergency that lasted for nine days.”

Jain said that due to this series of adversities, the supply situation has not settled down, and given India’s major dependence on imported newsprint, the sector has suffered.

Can domestic manufacturers step up?

There has not been any significant investment in the newsprint capacity in India, Jain said. “For domestic manufacturers to have capacity in India, they need to have access to waste paper. However, the waste paper collection in India is not enough as it goes to different industries like food packing or garment packing. The paper mills in India thus need to depend on the import of waste paper.”

He said manufacturing newsprint is also an extremely energy intensive industry. One tonne of paper requires roughly 1,500 kilowatts of energy and 20,000 litres of water. “Therefore, from the water, energy and fibre position, it’s not viable for people to put up industries for newsprint in India which is why we have not seen any increase in capacity to manufacture newsprint in India in the last 10 years.”

What the existing paper mills are doing instead is using their capacities to manufacture brown paper instead – it is easier to produce and there is a large market in China for packaging. Capacity is present theoretically but unavailable practically, and the output is missing for newsprint, Jain said.

Further, the quality of Indian newsprint does not match the international standard, he said. “This is because of two reasons, primarily. The first being that the quality of input i.e. raw material is low, and the printing machines are very old. The equipment is not the latest technology available in different parts of the world. This is why India does not export any newsprint.”

Can meet demand: INMA

Contrary to what Jain believes, Vijay Kumar, secretary general of the Indian Newsprint Manufacturers Association, said that given the reduced circulation post-Covid, domestic manufacturers can easily meet the demand – he pointed to a 50 percent reduction in consumption “based on data”.

Kumar said, “There are 550 mills currently running and any of them can manufacture newsprint if they wish. Newsprint is totally based on demand and supply. Mills produce it based on orders because there is no secondary use of newsprints apart from publication of newspapers. Therefore, they only manufacture it after an order is received.”

But only 35 of these mills are getting newsprint orders, Kumar said. He also said that foreign manufacturers drop their prices to push into India when “they don’t get a good amount of orders”. “So when the prices come down, obviously all the buyers prefer imported newsprint. Then when the prices go up, they run back to the domestic ones.”

In 2021, the Directorate General of Trade Remedies recommended the imposition of anti-dumping duty on newsprint from six countries, including Russia, for five years to guard domestic manufacturers from cheap imports. The duty ensures fair trade practices and creates a level-playing field for domestic producers, and foreign producers and exporters.

This was after the INMA requested the initiation of an anti-dumping investigation in 2020. Now, Kumar said that the domestic industry was serving 60 percent of the demand.

However, there are issues that still plague the domestic producers.

“The reason why imported newsprint is preferred is because instead of re-pulping odd sized newsprint, foreign exporters sell it to India at throwaway prices. Since newspapers in India do not have a standardised size, they are able to make do with any sized newsprint. Machines in Indian paper mills, however, have a standardised size. So frequent changes in the size of the newspaper causes inconvenience in production, which gives the advantage to the imported newsprint,” Kumar said.

Another reason is the availability of raw materials. India is a fibre-deficient country and terming the newsprint industry as “hazardous” has made things even more difficult. As a policy measure, the government only encourages paper made out of recycled fibre which is called waste paper. Therefore, the raw material used to make newsprint in India is old newspapers.

Kumar said, “Domestically, the collection of waste paper is very poor. The basic reason is that we don’t segregate waste paper from our houses which deteriorates its quality. This is why we don’t have quality raw material and thus have to depend a lot on import of raw material.”

He said that this shortage can be easily overcome if the consumer and producer come together and create awareness. “If we can create enough awareness among people to segregate their waste and collection of waste paper can be organised, then the raw material can start coming into the system easily. Then our dependency on imported raw materials will be reduced...the issue will be resolved in a month.”

Update: The recommendation on the imposition of anti-dumping duty was made in 2015, not 2021. This has been corrected.