The handmade paper industry, mostly run by village organisations and co-operative societies, managed to fetch an export order of more than Rs 30 crore last year. In spite of being an important forex earner, the handmade paper industry is deprived of many sops which other export items enjoy.

"Though we are registering 100 per cent growth year after year, the government does not pay us duty drawback which they offer to other exporters," says Moinnuddin S Kagzi, director, Handmade Paper and Board Industries. Consequently, in spite of obtaining further export orders, the manufacturer falls short of liquidity and fails to fulfil them. "If thegovernment starts giving duty drawback to us, we can double our export."

The problems of handmade paper manufacturers does not end here. Though they are being allowed to participate in the handicraft fairs, not all handmade paper products are given the status and benefits of handicraft industry. Unlike other handicraft products, which get triple weightage, they only get double weightage which is normally given to small-scale industries.

Whether a certain product gets handicraft status or not depends on the manufacturing process and not on the end product. The products which involve value addition through manual labour are enlisted as handicraft products.

"Manufacturers should not expect the benefits of handicraft sector just by making carry bags out of handmade paper. But if an entrepreneur makes a product which involves the kind of value addition sought for handicraft status, we will definitely help them," says Rakesh Kumar, executive director, Export Promotion Council For Handicrafts.

But theambiguity in the process is evident from the fact that handmade paper has the status of handicraft, but not all its products are considered to be handicraft. "The making of handmade paper involves the kind of value addition needed for handicraft status. But when it comes to handmade paper products, most exporters are sending only packaging material which is in great demand," says D S Raju, director, Ripples Handmade Paper Products.

"Even our smaller problems are not being addressed. We are way ahead of the minimum limits for the status of export houses, but even after the repeated demand we have not received the status of export house," says Aminuddin S Kagzi, director (Marketing), Handmade Paper and Board Industries.

Ironically, while the handmade paper manufacturers are struggling with these problems, the government has launched a national programme to promote the establishment of over 460 new handmade paper units in clusters in different states.

Further, to promote the cause of the handmade paperindustry, the government has set up a research centre. The various activities of this centre include designing and modification of equipment suitable for rural industries, besides investigation of new raw material suitable for paper making and technical feasibility of new units. They have roped in KVIC, state governments and SIDBI for the purpose, but has been unable to address the basic problems.

The demand for handmade paper is fast rising in the western countries, and so has the competition from East Asian countries. The handmade paper is a labour intensive industry and the production cycle is such that it demands prolonged sunlight, chiefly available in this part of the globe. Moreover, the raw material is obtained by recycling the waste agro raw-material such as cotton rags in the form of tailor cutting, hosiery cutting and small quantities of waste paper.

Other agro fibres like jute, straw and banana are also used to blend with the primary fibres for mottling effect. In order to increase the productrange, handmade manufacturing units are using alternative raw material like jute, banana fibre, hemp and bagasse for making thin grammage papers.

Abundance of raw material and low labour costs in India give the local manufacturers a significant edge. "We have no threat from the developed countries, but the only danger is from the third world countries," says Avtar Singh Saini, owner of the Sthanishwar Hand Made Paper.

Handmade paper is fast replacing polythene and other chemically-made mill paper in developed countries. The export potential of the industry is evident from the fact that almost half of the 20,000 tonnes of handmade paper being manufactured by the 350 working units is being exported to the US and other European countries fetching nearly Rs 11-crore worth foreign exchange.

With many countries seriously contemplating banning the imports of non-biodegradable material in packaging and replacing it with eco-friendly recycled products, competition in the global market is stiffening.

If thegovernment does not wake up to realise the changing business equations, the handmade paper industry may end up losing a vital market share. Meanwhile, this ancient art of handmade paper, which was revived by Mahatma Gandhi during the freedom movement, continues with its struggle against bureaucratic apathy.