A growing number of paper stock dealers view India as an outlet for growing volumes of recovered fiber. China may be the largest offshore end market for this material, but there may be an upside to exploring the market in India, the world’s largest democracy.

Along with opportunities are significant challenges that need to be addressed, says Mike DiPlacido, general manager of Khanna Paper, one of the largest consumers of recovered fiber in India.

DiPlacido will be one of the speakers on the export panel session that will close out the 2014 Paper & Plastics Recycling Conference & Trade Show.

The 25-year veteran of the paper industry has, for the past two years, run the North American procurement arm of Khanna Paper Inc.

As a preview to his presentation, DiPlacido took part in a question-and-answer session with Senior Editor Dan Sandoval of Recycling Today.

Recycling Today (RT): First off, please tell me a little bit about Khanna Paper.

Mike DiPlacido (MD): Khanna Paper Inc. USA (KPI) is a solely owned subsidiary of Khanna Paper Mills Ltd. (KPM). KPI is the exclusive procurement arm that purchases secondary fiber for KPM and other partner mill groups in India. In addition, KPI purchases prime, job lot and mill broke [paper-mill-generated scrap] for converters in India.

KPM is one of the largest secondary fiber paper mill groups in India. The company has four paper machines on 100 acres. The four paper machines consist of a fine printing and writing paper machine, newsprint machine and two board mill machines.

The uniqueness of this setup is that there is 100 percent capture of fiber. Whatever fiber is rejected by the fine paper machine flows to the newsprint paper machine, and all other rejected fiber flows to the paperboard machine. Ultimately, the only thing that gets landfilled is the ash.

KPM also is equipped with its own electrical generation plant, which allows it to not have to rely on the unreliable national grid. KPM also is unique with 12 mill-owned reclamation centers in India.

RT: Can you talk a little bit about the present landscape for the Indian paper industry?

MD: Total waste paper demand in India is 7.8 million metric tons per year, of which 50 percent is supplied domestically and the other 50 percent is imported. Of the recovered fiber imported into India, about 52 percent comes from the United States.

While India is gaining attention, it is far behind China, although both countries have an enormous market potential with more than 1 billion possible [household] consumers. Factor that in with the emergence of e-print in North America, and the printing demand for secondary fiber is in a serious decline. Therefore, emerging markets, such as India, are an ideal match for recyclers in North America who are looking to be ahead of the curve.

RT: Are there particular grades that are most interesting for the Indian paper industry?

MD: The mix of grades currently imported from North America and consumed in India are as follows: double sorted old corrugated container (PSI 12), about 20 percent; mixed paper, 14 percent; sorted office paper (SOP), 13 percent; coated book stock, 10 percent; old newspapers (ONP 7-9), 9 percent; new double-lined kraft cuttings, 5 percent, kraft carrier board (KCB), 4 percent; and other grades, 19 percent.

RT: One issue we hear is the problem with the infrastructure in India. Can you tell me some issues that are keeping the Indian paper industry from really growing?

MD: Infrastructure, although improving, still has a long way to go. Whether it is the electrical grid system, road, rail and ports, all these issues currently add needless cost to the papermaking process in India.

In addition, outdated labor laws need to be changed, specifically the Trade Union Act, which was enacted in 1926. The act allows any seven workers to register as a union, which leads to multiple unions.

The number of unions can make for difficulties in resolving disputes, in some cases years.

Another major issue in India is the number of antiquated and small mills that are neither efficient nor competitive.

RT: Where do you see the Indian paper industry in the next three years?

MD: The Indian market can’t be ignored as the emergence of the middle class continues. Meanwhile, the advance in education and the hunger for print media and packaging is going to increase. It is projected that India's paper Industry is expected to grow 6 to 7 percent per year over year.

Having said that, capital expenditure improvement projects are going to be announced. KPM currently has a $20 million project in place that will increase our production of both fine paper and newsprint by 20 percent.

I think you will see more North American-based manufacturers looking at acquisitions or partnerships in the same manner as International Paper and Mead. You might even see some greenfield projects with more energy-efficient larger paper machines. Although there is a lot that needs to be done, the paper manufacturing industry is definitely in a strong upward trajectory. Further, once newer and faster paper machines are installed India will be able to make a quality product that can be exported to other countries.

(More information on the 2014 Paper & Plastics Recycling Conference can be found at www.RecyclingTodayEvents.com.)