What connects the raddiwalas to the newspaper publishing houses?

Scrap dealers play a vital role in bridging the gap between the supply and demand of newsprint in India.

Raddiwalas (scrap dealers) play a key role in middle class houses in India. These raddiwalas either have shanty steel shops or go door to door with a heavy weighing scale on their back to collect the junk. Usually at the end of a month all the waste material in the house is tied up in a set and is sold to the raddiwalas based on its weight. A major portion of this waste comprises of old newspapers as it is highly demanded by the scrap dealers.

The primary reason for the high demand is the huge scope for the recycled newsprints. Wastepaper is the prime fibre source for paper, paperboard and newsprint production for about 550 mills in India. Besides, recycled fibres from waste paper are an important input raw material for production of paper products. Since, the pulp of a tree is a common source for obtaining paper, the recycled paper manufacturing provides a better alternative and reduces deforestation and pollution.

However, the recovery and utilisation of waste paper by paper mills in India is 3.0 million tonnes annually, that is, 27 per cent of the total paper and paperboard consumed. The rest is the imported. According to an estimate, the imports have increased from US$ 5.1 million in 1980 to US$ 1 billion in 2011.One cause for the rise in the imports can be attributed to the relaxation in regulations placed on the newsprint in India.

Brief background of Newsprint 

Newsprint refers to the cheap, low-quality absorbent printing paper made from coarse wood pulp and used chiefly for newspapers. It was under the ambit of Essential Commodities Act, 1955 and was regulated under the Newsprint Control Order, 1966, until 2004.

Being a part of the essential commodities act, the newsprint was regulated to a level such that no consumer of newsprint was allowed to  consume  or use newsprint in excess of quantity authorised by the Controller from time to time. In addition to the Import  Control  Order  1955 also laid restriction on the import of newsprint. The latter was however scrapped in 1992. In 2004, newsprint was removed from the Essential Commodities Act and the Newsprint Control Order, 1966 was revised to Newsprint Control Order, 2004. In 2009, the Ministry of Finance granted special custom duty exemptions to the newsprints to ease the import of newsprints.

The exemptions led to an increase in the import of wastepaper by the domestic paper mills. With waste paper becoming the predominant raw material within the paper manufacturing, the demand for waste paper has increased in the last few years. For instance, in the early 70’s the share of waste paper used was only 7% compared to 2011 where it constituted the majority share at approximately 47% of total production in India. This increase in demand has significantly affected the newspaper and magazine publishing houses for whom newsprint accounts for 50-55% of the total cost of production. Thereby expanding the market space for the scrap dealers in India.

Scrap dealer industry in India

The waste paper collection in India is usually done by the informal sector where individuals go from door to door to collect waste. This waste is then sorted and transported to zonal segregation centres from where the collected waste material is finally sent to the paper mills. This process has become formalised since the advent of online economy.

The start-ups like pastiwala.com and kuppathotti.com have created online platform to make the sellers meet the buyers. These online ventures also reap the benefits of economies of scale while they employ large number of water collectors to provide door to door collection of the waste. This gives them the scope to pay a higher price for the scrap compared to an individual scrap dealer. For instance, where a regular scrap dealer would offer 8-9 INR per kg, these online ventures provide 12-13 INR depending on the domestic and the international market prices. Moreover, they also ensure a better standard of living for the wastepaper collectors.

We need these changes in the waste paper collection industry to meet the demand of newspaper in India which is expected to be rising from about 2.5 million to 3.5 million tons per annum by 2017-18. With the newsprint constituting 18% of the demand for paper in India it is important that the supply of the newsprint can be increased to meet the demand. Thereby, making scrap dealers an important part of publishing newspaper.

Devika Kher is a Research Associate at Takshashila Institution. Her twitter handle is @DevikaKher.

Image Source: Flickr (Runran)