More than 2,000 corrugated or carton box units in Tamil Nadu and Puducherry are on the verge of closure due to an export-led shortage and sudden increase in kraft paper prices.
Following this, the South India Corrugated Box Manufacturers’ Association (SICBMA) has urged the Centre to impose an immediate ban on export of kraft paper in any form as its supply to the local market had shrunk by more than 50% in the recent months.
Kraft paper is the main raw material in the production of corrugated boxes used mainly by sectors such as pharma, FMCG, food products, automobiles and electrical appliances. The sudden increase has hit production and hundreds of SMEs in Tamil Nadu and Puducherry, said SICBMA president G. Nagaraj.
Though the demand for the boxes is steadily growing post COVID-19, the manufacturers are not able to ensure supply, as thousands of tonnes of kraft paper are leaving Indian shores for export markets leaving the local industry high and dry. The severe shortage, coupled with an unprecedented increase in the price of kraft paper, has pushed manufacturers to the brink of closure, SICBMA said in a statement.
According to Mr. Nagaraj, the cost of kraft paper typically accounts for 85% of the production cost of corrugated boxes. With the steep rise in the price of kraft paper, triggered largely by the export-led shortage, the cost of manufacturing of corrugated boxes has risen by 60%.
It is a highly competitive sector and the box manufacturers work on a very thin margin. Most industries can neither accommodate the sudden rise in the raw material cost nor pass it on to the end customers. Unless export is banned and supply of kraft paper is ensured, many industries will have to wrap up their business, he pointed out.