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News release

Indian timber market emerges as prospect and challenge for tropical timber sector

Yokohama, Japan, 5 November 2003

Illegal trade is only one of the possible reasons for discrepancies between data for the export and import of tropical timber, according to a report that will be discussed this week by the International Tropical Timber Council (ITTC).

The survey, which was commissioned by ITTO and carried out by the Roman Forum (a consultancy), examines the current supply and demand status of the Indian timber market and the market opportunities in India for the tropical timber sectors of other ITTO member countries.

India's annual industrial roundwood imports, mostly of tropical hardwoods, have tripled in the last five years and now exceed two million m3 per year, according to the report. Demand for imported tropical timber is expected to continue to grow and could approach 10 million m3 by the end of the decade.

The survey team carried out in-depth reviews of wood usage in 15 major urban centres in India, as well as an appraisal of timber consumption in rural areas. It estimated that total industrial roundwood consumption in the country would exceed 70 million m3 per year by the end of the decade, while domestic supply would fall short of this figure by an estimated 14 million m3. This shortfall could be met in large part by the tropical timber trade - provided it can compete successfully against a range of substitute products.

According to Dr Maharaj Muthoo, who presented the survey results to the International Tropical Timber Council today on behalf of the Roman Forum, the increasing demand for timber in India is due to the resurgence of the domestic economy, which is poised to grow at over 6% per annum, and the rapid expansion of middle and upper income groups. Moreover, intensive construction activity is being spurred by lucrative housing schemes and rapid urbanization, with the urban population expected to grow to 345 million in the next decade.

Timber supply, on the other hand, is constrained by the massive consumption of wood for fuel and other rural needs, the degradation of natural forests, and restrictions on timber harvesting in order to conserve remaining forests for environmental services.

Nevertheless, Dr Muthoo warned that tropical timber producers must meet a range of challenges if they are to penetrate this rapidly growing market.

"Unlike most other commodities, the Indian timber market is disorganized and dispersed," he said. "This weakness is already allowing inroads by plastics, aluminium and steel in construction and furniture, which could amount to around 25% of wood volumes".

In addition, said Dr Muthoo, knowledge of the timber sector is poor due to weaknesses in the national forest sector and its statistical system, threatening the success of timber marketing efforts in the country.

"The system is so outdated that the timber traders, constructors and consumers have no source of reliable and timely timber market intelligence and economic information to turn to," he said.

"However, these challenge can be converted into opportunities by modernizing the statistical system and by further reducing the tariff and non-tariff barriers for facilitating imports and market diversification."

'Review of the Indian Timber Market' (PPD 49/02 (M)) is part of ITTO's ongoing program to bring more transparency to the tropical timber trade and to report on trends, prospects, constraints and opportunities for the trade. For more information contact Mr Amha bin Buang, Assistant Director of Economic Information and Market Intelligence, eimi@itto.or.jp

Daily reports for the 35th session of the International Tropical Timber Council are available at the website of the Earth Negotiations Bulletin, www.iisd.ca