Wood and
Wood Products in India
WOOD AND WOOD PRODUCTS
- Wood and wood products in India grew in value by 5% per
annum during the 2000-2010 review period, although growth did not start
until 2004.
- Total value amounted to INR220 billion in 2010;
equivalent to a 58% increase since 2000. Business customers was the main
buyer group as business purchases accounted for virtually all value sales
in 2010, although grew at a very moderate rate – 5% annually since 2000 –
defining the performance of the market.
- Compared with wood and wood products overall, the
turnover of Indian wood product manufacturers grew at a marginally slower
pace – 4% per annum and accounted for INR226 billion in 2010. This figure
has increased by 43% since 2000. Production of veneer sheets and plywood
took the lead in terms of generated industry turnover – contributing 43%
to the total in 2010. Categories of sawmilling, planning, impregnation of
wood and builders’ carpentry and joinery generated 20% and 24%
respectively in 2010. The least significant categories for the industry
were those of other products of wood and another of wooden containers with
their shares of 9% and 4% respectively in 2010. Turnover stemming from
sawmilling, planning, impregnation of wood grew the most since 2000 – by
58% - and was followed by the 5% annual growth of builders’ carpentry and
joinery. Sawmilling started growing as a result of improved wood
availability: more than 150 sawmills were reopened while many new
industrial licenses were pending for wood working units.
- India has not been highly dependent on imports of wood
and wood products, as on average they constituted 8% value share during
the review period. However, the situation might change due to the
long-term shortage of wood supply in India. A rapid influx of rural
workers into urban areas has been forecast which would cause higher
demands for wood for house constructions and furnishings. Therefore, it is
noted that imports to India might become much higher. In 2010, main import
partners were China (with 22% share of total import value), Malaysia (with
16%), and Thailand (10%); less significant partners were Germany (6%) and
Myanmar (5%). Main imported materials are all varieties of tropical wood and
timber products, as India is one of the largest consumers of them. Imports
are expected to continue in the future due to good economic prospects of
India, despite the growth of use of alternative products.
- The number of employees in the industry increased by
52% since 2000 while the number of companies grew by 72% during the same
period. Most of the people were working in micro size companies (with up
to 10 employees) which constituted 71% of total number of companies in
2010. Nevertheless, large companies (with more than 100 employees)
generated the biggest share of turnover; 61% of the total in 2010. In
order to ensure local supply of materials for the industry, the government
has been promoting large scale plantation areas managed by industries and
farmers in order to increase wood supply from there, even if it has
already been substantial. To be more precise, in 2010 sustainable harvest
from agro-forestry plantations was around half a million cubic meters per
year.
- Exports of wood and wood products from India were even
smaller if compared to imports – on average they constituted 3% of total
product output during the review period. Exports recovered soon after the
economic downturn – after the drop in 2009 export value rose up again even
above the pre-downturn level. By the end of 2010, main export partners
were the US (with 22% of total export value), the UK (with 13%), UAE
(12%), Germany (5%), and Canada (4%). Export structure remained the same
throughout the review period just with slight deviations of trade shares
by country.
- Spending on supplies such as raw timber has taken up an
increasing portion of total industry costs; 87% of the total in 2010
compared with 80% at the beginning of the decade. Consequently, share of
labour costs decreasing from 17% of total industry costs to 13% by the end
of 2010. Profit margin EBITDA has consistently been at 40% of total
industry turnover, indicating healthy operating profitability.
- During the 2011-2016 forecast period, turnover is
expected to grow by an 11% annual rate. However, increasing demand for
specialised products by increasingly wealthy urban Indians will require
additional investment into infrastructure and processes by local wood
product manufacturers. First of all, investments are needed to improve the
wood working units, renew machinery and enable usage of modern processing
and production technologies.
