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Recovered Paper Industry: Coping with the Crisis

The All India Waste Paper Dealers Association has urged the Government of India to include the waste paper or recovered paper industry in the essential-services category.

In an exclusive interview given to Paper Mart, Mr. Naresh Singhal, President, AIWPDA, talks about the challenges and impact of lockdown on the recovered paper (RCP) industry and how the waste paper sector is dealing with the disruption caused by the pandemic.

Naresh Singhal
Mr. Naresh Singhal, President, AIWPDA

Excerpts.

Paper Mart: What has been the impact of the lockdown on waste-paper business and what measures is AIWPDA taking to overcome the disruption caused by the pandemic?

Naresh Singhal: Since the day lockdown was imposed, many businesses across the country either came to a standstill or closed temporarily. Just like any other industry, the waste paper or recovered paper (RCP) industry was drastically hit by the lockdown, as a major part of this business depends on imported waste papers.

After the lockdown, around 35,000-40,000 containers with imported waste paper got held up at various inland container depots and container freight stations. To add insult to injury, the held-up waste paper containers have been imposed with demurrage, detentions and ground rent penalties. 

The lockdown has badly affected the domestic collection of waste paper across the country. According to AIWPDA, the collection is around 27,000-28,000 MTPA with an approximate price of Rs 32 crore to Rs. 35 crore per day. This is the loss incurred by the domestic waste paper industry.

The lockdown has impacted all forms of business operations. The current disruption has caused liquidity issue in the market due to delayed payments from the paper mills.

PM: The COVID-19 pandemic represents a new disruption for waste paper traders. What new policies or guidelines have been developed by the government for waste paper traders?

NS:  The recovered paper (RCP) or waste paper industry has never been in the direct consideration of government agencies, and no new guidelines have been issued. However, AIWPDA has urged the government to include waste paper collection in the essential-services category. Waste paper is also covered under the Solid Waste Management Act and should be treated alike.

On contrary, in developed countries, RCP is included in the essential-services category with financial aids and set guidelines. We have urged the government to consider such provisions for the domestic waste paper industry.

PM: What kind of market trends do you foresee for the initial couple of quarters post normalcy and in the next FY?

NS: Post-COVID, it will take at least one year to return to normalcy. The current situation is still alarming, and not much relaxation has been provided in various restrictions around the country. The collection levels will be still low – will not exceed more than 30 percent. On the other hand, the consumer demand graph will take months to normalize. The upcoming quarters up to December 2020 will still see a cash shortage amongst the consumers due to the lockdown and closed businesses. The middle-income group will not be spending money on unnecessary commodities. It will go only for essential goods. Most of the businesses around the country are closed, and that has resulted in lower demand. When demand is low, production gets impacted, leading to a shortage of finances. I believe the next two quarters will be quite stressful for the market. However, from April 2021, market conditions are likely to improve and things are likely to normalize.

PM: What is the biggest challenge the waste paper industry is facing today?

NS: Waste-paper business is a completely labor-oriented business. The entire infrastructure of this industry is supported by labor; we totally depend on ground-level manpower. This business has been able to sustain itself through support from workers like scrap collectors or kabadiwalas, who are in lakhs all the across the country. When waste paper is collected and made available at retail centers, waste paper is segregated, graded and put through packaging or bailing, and loaded and unloaded. All these processes require a huge manpower. The shortage of workforce is currently the biggest challenge for the industry. The large number of workers working in industrial areas constitute around 70-75 percent of migrant workers from other states.

Another challenge that waste paper traders are facing is liquidity. As mentioned earlier, low demand has led to a shortage of finances for all. Paper mills are unable to make payments to waste paper suppliers due to falling demand.

PM: Is there anything else you would like to add?

NS: I believe the waste paper industry is in dire need of a strong policy, support from government, recognition as in the essential services category and other aids as well. We urge the government to devise set guidelines and provide benefits to the people involved in waste paper trade, as it is also covered under the Solid Waste Management Act. And now, when our government is pushing the ‘Vocal about Local’ initiative, we should make efforts to improve the domestic business conditions.

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