UP-GRADATION of Wood-Based Industries is Highly Required

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Wood is an integral part of our life since time immemorial as artisans have been using it for making agricultural implements and domestic products. Due to increasing urbanization and industrialization, the use of wood has become commercial in nature. The efficient processing of wood is not much prevalent in our country as majority of units are Micro, Small and Medium Enterprises (MSMEs). With the liberalization of economy in 1991, the demand for wood and wood products has increased at faster rate, hence their import has increased manifolds in our country.

Status of Wood-based Industries

The wood-based industries may be classified into three categories; sawn wood based (construction, furniture, etc.), composite wood panels and pulpwood based. As per the draft policy paper released by the ‘Network for Certification and Conservation of Forests’, the projected demand of wood for construction and furniture industries is about 2.9 crore cum and 75 lakh cum. This policy paper also reports the paper industry employs more than 10 lakh people in about 800 paper mills across the country and the projected demand of wood is about 3.6 crore cum. As per the report of Indian Plywood Research and Training Institute, plywood, and panel industry, consists of around 3,300 units which provide direct employment to more than 10 lakh people. These industries are generally labour intensive and generate employment mostly for unskilled and semi-skilled persons in urban and rural areas.

Integration of Agro-forestry and Wood-based Industries

To meet the shortage of raw materials, WIMCO Seedlings Ltd. (UK) and ITC, Bhadrachalam Paperboard Ltd. (A.P.) promoted the farming of poplar and cloned eucalyptus through providing quality plants, package of practices and assured buy back arrangements in 1984 and 1989. These models have ensured the backward integration of raw material with wood-based industries. Secondly, Yamunanagar city in the state of Haryana which is known as ‘plywood capital’ of the country has the capacity to manufacture about 45% plywood of the country. The ‘Yamunanagar Model’ in North-West India has developed mainly due to Yamuna river, highly fertile region, progressive farmers, liberal policies of the Government of Haryana and closure of plywood industries in North-Eastern India. This model has benefitted many stakeholders like farmers, labourers, contractors, transporters, traders and industrialists

How to Increase Wood Production?

To increase production of large sized timber, degraded forest areas in our country can be better utilized through raising of medium (Kikar and Ailanthus) to long (Teak and Shisham) rotation plantations through use of better quality planting stock and improved silvicultural practices. If twenty lakh ha of degraded forests is brought under improved plantations which might yield annually about 1.0 crore cum of timber worth about Rs 16,800 crore and generate employment of about 500 lakh person days (author’s estimate). These plantations may be financed either by the Government or through public private partnership. The second option seems more feasible as the forestry sector has always faced the financial crunch due to lower budgetary allocations. Alternatively, these plantations may be raised on cultivable wastelands and current fallows under contract farming. As the imported timber may become costlier in future due to strict enforcement of forest certification regime, so increasing domestic production of timber and promotion of composite wood panels may be the right strategy in the long run.

To increase production of small sized timber, ten lakh ha of farmlands may be brought under short rotation (Poplar, Eucalyptus and Malabar Neem) plantations, which will yield annually about 1.9 crore cum wood worth about Rs 9,900 crore and generate employment of about 800 lakh person days (author’s estimate). The comparatively high income from farmland plantations has generated healthy competition with agricultural crops, however, the area under agro-forestry fluctuates depending upon their relative profitability. Hence, it is high time that integrated models of agro-forestry and wood-based industries are promoted. Secondly, enforcement of forest certification may be ensured, which will restrict the import of illegal timber that will directly help the farmers in getting better prices of farm-grown wood.

Recent Initiatives and Policy Decisions

Recently, Government of India has enhanced the investment/turnover limits for MSME sector. This has led to the entry of bigger players in this sector that would force the smaller units to upgrade their quality of wood products to remain competitive. This will also help them in meeting the aspirations of middle class and increasing the exports of wood products. Government of India has also launched ‘Atmanirbhar Bharat Abhiyan’ to reduce dependency on imports and encourage the export of local products. To promote furniture manufacturing, Government of India has already taken several measures. Hence, our country has a vast potential to expand the wood-based industries for which the following policy initiatives are suggested:

Encouraging investments through budgetary allocations or public private partnership for increasing productivity of degraded forests (Ministry of Environment, Forests and Climate Change)

  •  Encouraging investments in plantations and wood-based industries through discounted loans and capital subsidies (Ministry of Finance)
  • Increasing investments in agro-forestry (Ministry of Agriculture)  Modifying EXIM policy (Ministry of Commerce)
  • Encouraging certification of forests and forest products (Ministry of Environment, Forests and Climate Change and Ministry of Commerce)
  • Increasing import duty and reducing Goods and Services Tax on wood and wood products (Ministry of Finance)
  •  Extensive training and development programs to improve the quality of wood products (Ministry of Skills Development)

It is suggested that a high-powered Committee with all the stakeholders may be constituted to make recommendations to the Government for suggesting various measures for increasing timber production from degraded forests and farmlands in a time bound manner. The Committee may also consider the recommendations of various task forces suggested for promotion of growth of wood based industries. The impetus on speedy development of plantations and wood-based industries will generate employment locally. This will be a win-win situation for the country as expansion of these sectors will generate employment opportunities for labourers, business opportunities for various stakeholders, earn foreign exchange and conserve the forests and overall environment.

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