For the last fifteen years the unbridled expansion of the Indian newspaper industry has been fuelled by increasing literacy, economic prosperity, and the “introductory pricing” of new editions by predatory newspapers going into new territories. Foreign direct investment in print media has also brought in cash to help expansions and scaling up. There is a natural growth in pagination, colour, content and the internet as well. But as the The New York Times shrinks in width and thins out to anorexic levels, the Times of India swells to 32, 48, and even 64 pages on Sundays – all for a bargain price of Rs. 2.50 on weekdays and Rs 4.50 on Sundays (US$ .07 and US$ .11). All this while the cost of even 32 broadsheet pages of newsprint is Rs 16 and headed for Rs. 20 (US$ .40 to .50). Even the thinner newspapers of Sri Lanka and Pakistan are priced more reasonably. Only in some sensible states such as Kerala do the newspaper publishers resist suicide and charge at least Rs 4 for a daily.

Now newsprint prices have risen again to levels not seen in India since the winter of 1994-95. Having hit US$ 760 a ton they are looking at the US$ 900 benchmark again. Worse yet there are predictions of US$ 1,000 a ton and this is after a 23 per cent price increase in the last four months. This is in comparison to the US$ 50 a ton rise that publishers resist every six months. There are reports of newsprint being imported at prices between US$ 900 and US$ 945 a ton already.

Apart from the serious language newspapers that have actually become profitable for the first time in their long history, among those most affected will be the very profitable Bennett Coleman group, publishers of The Times of India. Bennett Coleman, says it consumes 425,000 tons of newsprint annually, approximately 22 per cent of the country’s consumption. India’s 2 million ton consumption although increasing well above the world average is still just 5.2 per cent of the world consumption of 38.3 million tons. The crucial issue seems to be that world capacity has shrunk by two million tons to just this consumption level of 38.3 million tons while the input costs including energy have greatly increased. Smaller and medium sized publishers say that they are getting domestic newsprint at Rs 28,000 to 29,000 (US$ 718 to 743.5) a ton while imported newsprint is in the range of Rs. 33,000 to 36,500 (US$ 846 to 936) a ton. Imported newsprint in India attracts 5 per cent customs duty which is why some domestic manufacturers unable to compete with the Chinese mills who were at US$540 levels not long ago, have actually switched over to offset papers.  Larger buyers however do get quantity discounts of anywhere from US$ 10 to 30 a ton. The real issue however is that international mills are not willing to commit to definite deliveries at a contracted price.

Theories abound both as to the cause of the price rise (China and India are to blame for everything) to the diversion of pulp to more value added paper and board production and to the closure of North American newsprint machines and the shortage of recycled inputs. Medium sized newspaper owners in India are nevertheless hopeful for a price correction in the next couple of months. They are counting on increased newsprint capacity coming on line in Malaysia and Indonesia.

It is a matter of conjecture however, if Indian mills such as Tamil Nadu Newsprint and Papers will switch back to newsprint production from more lucrative non-coated production. TNPL, which uses bagasse (sugar cane residue) for fibre inputs is believed to have reduced its newsprint production to just 10,000 tons a year.

It will be still another matter if the daily newspaper publishers think that raising their cover price to Rs. 4, 6, or 8 anytime soon would be inflationary. It is more likely that advertisement rates will continue to rise especially if newspapers have to reduce pagination for lack of newsprint supply.