Prospects and challenges for the emerging timber import market in India

Abstract

External sector liberalization and ban on most domestic logging created a unique market opportunity for global wood products in India. The growing prosperity of Indian households has allowed the market for imported wood products to develop quickly. Despite these prospects, several challenges impede the growth of wood-based industry in India. This article provides an analysis of the current business environment and market structure that may reveal future potential of the wood sector in which US-based firms can participate in India's growth. The Indian wood industry has taken the initiative through agroforestry, which is reinforced in proposed public-private partnerships. Decentralized forest management is an important policy issue in India now. India's industrial policy, with respect to wood-based industries, witnessed removal of protection, which exposed the domestic industries as inefficiently small, lacking economies of scale and using outdated technology. Foreign companies can now invest up to 100% in wood-based industries. Thus, it is obvious that many foreign companies view India as a country with a strong commercial appeal, both as an emerging market and as an economic partner in possible collaboration. However, religion, social, economic, and environmental challenges dominate the society and have a significant impact on the lifestyles and buying behavior of the Indian population. Copyright © 2009 by the Society of American Foresters.