The adoption of the European Union Timber Regulation (EUTR) in December 2010 changed the landscape of timber imports for the European Union, Australia, and the United States.
No longer did these regions import illegally harvested exotic timber from countries on the African continent, and Indonesia, Myanmar, Sarawak, etc.
As the EUTR regulations came into use, those importing nations were required to receive chain-of-custody documentation which proved timber had been harvested legally. Otherwise entry was not permitted. Other nations, however, paid no mind to the EUTR regulations, which did not deter countries like China and India from continuing to import unregulated timber.
The import rules succeeded regardless, because — over time — the illegal supply of exotic timber dropped significantly.
Unlike China, India is a democracy with an open market capitalist system. It is also a culture accustomed to using wood for building, again unlike China. Traditionally in India homes were not built out of wood, but rather were finished with wood. Siding, wainscotting, doors and doorframes, windows, and more have historically been made out of exotic hardwood species. India banned all domestic timber harvesting around 2000, so since then has relied exclusively on imports.
The dropping export volumes from countries with a previously-active illegal timber trade has provided an opportunity for other nations, which engage in sustainable harvesting, to sell manufactured wood products into India.
For a historical perspective on this huge market, please go here: https://madisonsreport.com/2017/02/02/india-softwood-lumber-use-2016/
As for the current reality and projection for the future, a recent International Monetary Fund (IMF) report details good growth prospects for India’s economy. The IMF projected a +12.5% growth rate for India in 2021, the only major economy to have a positive growth rate in 2019. The annual World Economic Outlook, prepared for the spring meeting with the World Bank, says the Indian economy is expected to grow by +6.9% in 2022.
In 2020, India’s economy contracted by -8% according to the IMF. Meanwhile, India’s exports and imports surged more than +50% from a year earlier in March 2021, but this was from a very low base. Data from the Ministry of Commerce shows that exports grew +58% to a record US$34 billion and imports rose +53% to US$48 billion in a month when global trade was disrupted by the week-long closure of the Suez Canal.
(See: https://indianexpress.com/article/business/economy/imf- projects-indias-growth-rate-to-jump-to-impressive-12-5-per-cent- in-2021/)
Elsewhere, the US Department of Agriculture (USDA) Global Agriculture Information Network (GAIN) report of 2019 found that India’s annual import of logs, lumber, and wood products increased from US$1.3 billion to US$2 billion in the past decade. India remains a long-term prospective market for US forest products, specifically lumber and logs. The poor/inadequate level of processing by domestic sawmills has prompted the Indian trade to import higher volumes of lumber versus logs in recent years.
The share of US lumber in total exports to India has risen from 3% in 2007 to 42% in 2018. Imports of forest products from the United States has been witnessing an annualized growth rate of approximately 14% since 2007. Imports of lumber were dominated by shipments of softwoods, the 2019 GAIN report found.
Why has Canadian export share not increased during this time as well?
Value of wood and wood product imported into India from financial year 2011 to 2019, with an estimate for 2020
Meanwhile, India’s lumber imports from Canada have been dropping abysmally from 2012 through September 2020! What is the reason for this? It certainly is not from lack of demand, nor due to slowing growth in India.
The July 2021 issue of Exports released by BC Stats on September 2 found that notable declines of total B.C. origin exports were reported for South Korea (-17%), India (-41%) and Mexico (-15%).
According to a recent study conducted by the World Bank, the organized furniture market across India is expected to grow at a rate of about +20% annually over the next few years. The value of imports by that industry was more than 396 billion Indian rupees (US$5.38 billion) at the end of fiscal year 2020.
Indeed, due to a surge in building projects, India’s plywood consumption is also projected to grow significantly. The Food and Agricultural Organization (FAO) of the United Nations ranked India third in the world for global imports of veneer sheets in 2019, accounting for a full 8% of the world total.
According to a report ‘Indian Plywood Market: Industry Trends, Share, Size, Growth, Opportunity and Forecast 2021-2026‘ from the IMARC Group a market research company, the Indian plywood market was worth 222.5 billion rupees (US$3.03 billion) in 2020 and could expand over +4% annually up to 2026. The Indian plywood market is primarily driven by construction activity and the home furnishing sector. Growth in consumer disposable income levels along with the rising expenditure on home décor will support demand for wood based panels.
(See: https://www.imarcgroup.com/indian-plywood- market/requestsample)
While there are well-known challenges to exporting Canadian wood products into India, this is also true of the United States. Yet that country has significantly improved sales volumes from 2018 to present while that from Canada has plunged to almost zero.
One local British Columbia operator who has made significant improvements to sales into India is Sundher Group.
Having worked hard at this for a couple of decades, Surrey, BC’s, Tom Sundher told Madison’s, “We recognize that markets in North America for lumber products are very strong, and we are benefitting from that. But at the same time we know that our long term success must also include a range of international customers. While it would be easy to sell all our products to the US today, we know that the reality tomorrow might be very different, so we need a healthy balance.”
After a slower start, the business of exporting lumber to India has really started to develop over the last 5 years.
Since the BC Government’s forest sector market development agency Forestry Innovation Investment (BCFii) and the Canada Wood Group (CWC) industry association started working together in India, we have seen continued interest and demand for our products there. We are one of a number of BC companies collaborating together with these agencies to grow the Indian market for BC forest products.Dave Sundher, VP of Sales and Marketing, sundher group
With on-the-ground support from BCFii, Sundher Group supplied the Western Hemlock used as interior panelling for the new auditorium built at Mahatma Gandhi Memorial Medical College.
“To grow our business in markets like India, it is important to show potential customers what we have to offer and how it can be used”, explained Dave Sundher. “And projects that showcase BC wood species like the Gandhi Auditorium, the Taj Rishikesh (a resort in northern India), or the Peninsula in Mumbai (a high end residential project), are invaluable to companies like ours”.