Gujarat’s SME Corrugated Industry: Caught between Devil and Deep Blue Sea
Sandwiched between the kraft paper mills and large consumers, the SME corrugated industry of Gujarat is in dire strains again.
The industry’ major raw material, kraft paper, has been recently subjected to multiple, prohibitive and unprecedented price increases, resulting in making the corrugated packaging dearer by almost 25 per cert and the paper mills are planning for further hikes, in the coming weeks. Condition of SMEs is tougher as they have not been able to pass on the prize hike to customers.
To aggravate the situation further, the prices of all critical inputs of this industry have shot up substantially. The starch prices have more than doubled in the last one year. The price of stitching wire has also gone up almost 40 percent, primarily due to hikes in the cost of steel. The cost of labor has also gone up substantially and most of SMEs also find it difficult to get the labors for the job. We are in loose-loose situation says and entrepreneur from Ahmedabad.
It may be noted that corrugated packaging is required for safe transportation and distribution of almost all products of everyday use by a common man, be it milk, fruits and vegetables, engineering goods, textiles, consumer durables or medicines.
This industry is based completely on the recycled fibre base and has been adequately servicing the packaging needs of the country by successfully substituting the wooden packaging and contributing to the environmental protection and ecological balance.
Another problem with most of SMEs of the state is that they have recently invested heavily in technology up gradation. A leading corrugated box manufacture of Rajkot shared with the condition of privacy that they have invested around 2 crores in technology upgradation of machines imported from China and processes in last couple of years. These uncertain times are making it difficult for them to even pay back the installment commitments of the bankers.
The woe of the industry is both micro as well as macro. There is a worldwide shortage of fibre that go into the making of kraft paper, due to the closure of pulp mills in Chile due to the recent earthquake. The severe winter and snow in the North Americas have also put a lot of pressure on the availability of waste paper which is the main input for the local recycled paper mills in the country. Rising power tariffs and poor quality of supply are making things worst.
Local as well as national manufacturing associations have been trying to raise voice to the central government with little success. The industry has been appealing to the Government of India to allow import of Kraft paper at nil rates of customs duty and tide over the present crisis and also to give an opportunity to the industry to upgrade the quality of their products to international standards. Till now, all the appeals have fallen to the deaf ears. In all these uncertainties SMEs especially feel left out as there is hardly anyone who is representing the voice of SMEs.
There is sharp pessimism evident in hundreds of SME units of Gujarat where day to day survival is a challenge and entrepreneurs have stopped thinking about issues of quality and competitiveness in the wake of current situation.
Sandwiched between the kraft paper mills and large consumers, the SME corrugated industry of Gujarat is in dire strains again.
The industry’ major raw material, kraft paper, has been recently subjected to multiple, prohibitive and unprecedented price increases, resulting in making the corrugated packaging dearer by almost 25 per cert and the paper mills are planning for further hikes, in the coming weeks. Condition of SMEs is tougher as they have not been able to pass on the prize hike to customers.
To aggravate the situation further, the prices of all critical inputs of this industry have shot up substantially. The starch prices have more than doubled in the last one year. The price of stitching wire has also gone up almost 40 percent, primarily due to hikes in the cost of steel. The cost of labor has also gone up substantially and most of SMEs also find it difficult to get the labors for the job. We are in loose-loose situation says and entrepreneur from Ahmedabad.
It may be noted that corrugated packaging is required for safe transportation and distribution of almost all products of everyday use by a common man, be it milk, fruits and vegetables, engineering goods, textiles, consumer durables or medicines.
This industry is based completely on the recycled fibre base and has been adequately servicing the packaging needs of the country by successfully substituting the wooden packaging and contributing to the environmental protection and ecological balance.
Another problem with most of SMEs of the state is that they have recently invested heavily in technology up gradation. A leading corrugated box manufacture of Rajkot shared with the condition of privacy that they have invested around 2 crores in technology upgradation of machines imported from China and processes in last couple of years. These uncertain times are making it difficult for them to even pay back the installment commitments of the bankers.
The woe of the industry is both micro as well as macro. There is a worldwide shortage of fibre that go into the making of kraft paper, due to the closure of pulp mills in Chile due to the recent earthquake. The severe winter and snow in the North Americas have also put a lot of pressure on the availability of waste paper which is the main input for the local recycled paper mills in the country. Rising power tariffs and poor quality of supply are making things worst.
Local as well as national manufacturing associations have been trying to raise voice to the central government with little success. The industry has been appealing to the Government of India to allow import of Kraft paper at nil rates of customs duty and tide over the present crisis and also to give an opportunity to the industry to upgrade the quality of their products to international standards. Till now, all the appeals have fallen to the deaf ears. In all these uncertainties SMEs especially feel left out as there is hardly anyone who is representing the voice of SMEs.
There is sharp pessimism evident in hundreds of SME units of Gujarat where day to day survival is a challenge and entrepreneurs have stopped thinking about issues of quality and competitiveness in the wake of current situation.
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