New Delhi, May 28 (PTI): The country's paper industry is reeling under the twin pressures of scarcity of raw material and a serious technology gap as compared to its counterparts in other countries like Brazil, Chile and Indonesia, a study by industry chamber FICCI says.

The total domestic demand for paper is 7.2 million tonnes whereas production is only 6.7 million tonnes and the gap between consumption and production would be further widened if adequate steps were taken to spur the growth of sector, the chamber said in a release.

The availability of the raw material is a serious concern not only for wood-based paper manufacturers but also for the wastepaper based manufacturers as raw material, whether wood or waste paper, is not available in adequate quantity.

The creation of sustainable resource of raw material for paper industry is the need of the hour in the country, the chamber said.

Citing the example of South East Asian countries like Malaysia, Thailand and Indonesia where their governments have permitted private companies to grow plantation for pulp manufacturing, the chamber suggested that in order to overcome the raw material shortage, government should permit industrial plantation on degraded forest lands.

The chamber has urged the government to rationalise customs duty on import of machinery.

It also cautioned the government against the reduction of duties on paper under the Free Trade Agreement (FTA).

There is a wide gap between the technology of domestic paper industry and in competing countries as most of the paper mills are running on old technologies, which resulted in low productivity, the FICCI survey pointed out.

The chamber has recommended the rationalisation of the custom duties on import of plant and machinery for the industry and also sought the creation of a Technology Upgradation fund for the industry on the lines of the textile industry.