Report from India: Impact of free trade
Asia Observatory

05 October 2009

Report from India: Impact of free trade

India’s Free Trade Agreements are impacting domestic wood products manufacturers, especially the wood based panel makers.
Domestic MDF and high density fibreboard, hardboard and particleboard produced in India face stiff price competition from imports. They found it hard to make savings because of the relatively high cost of raw materials in India.
Many panel product factory development plans have been postponed or shelved. Some investors are considering relocating production or acquiring plant in countries such as Thailand, Malaysia or Indonesia where raw material availability is better.
Reports say that Archidply, a major producers of panel products with laminated particleboard and decorative plywood plant at Chintamani in Karnataka, has decided to delay the second phase expansion scheduled for 2009- 2010.
The company had reportedly planned expanding particleboard production at Chintamani and a new MDF factory at Rudrapur Uttarakhand.
In view of the severe weakness in the international markets, panel product import prices have come down drastically thus making domestic expansion of capacity risky.
Domestic investment in panel production Despite the global economic slow down India has been maintaining 6% plus growth and there has been domestic investment in finger jointing plant and some panel products. These factories utilise wood waste and agricultural residues such as cottonseed shells, ground nut and soya bean shells and bagasse. Some is also converted into briquettes, the use of which reduces dependence on solid fuelwood from the forest.
Eurowood Lumber Pvt Ltd has plant at Bhachau in Kutch district of Gujarat for fully automated UV coated solid wooden flooring. They are also making finger jointed flooring, being the first in India to produce very large boards. The new facility includes a bio-briquette plant.