Oct 28, 2008. /Lesprom.com/. Paper demand in India is increasing nearly 8% annually and supply has not been able to keep pace, The Economic Times reported. Globally also paper capacity is shrinking. Wood prices, stable for several years, are going up due to farmer revolts over plantation land in South America, exorbitant export duty on wood by Russia, warm weather in Scandinavia reducing forest harvest, illegal forest cutting in Indonesia and forest environmental issues in Canada, the US, Finland and Sweden. In India no greenfield wood based capacity has been added for more than two decades. No MNC or international paper maker has set up paper making capacity in India though other BRIC nations — Brazil, Russia and China — have attracted huge investments in this sector. Wood is a key raw material for paper making and India is a wood deficient nation. Landed cost of wood has risen sharply in last few years. Nearly a dozen Indian mills use wood as main fibre. Collectively the paper industry is the largest bulk buyer of wood, uniformly throughout the year and pay instantly on delivery, yet it has not been able to leverage these core strengths while sourcing and negotiating. The industry has also developed disease resistant, high yield, short duration clones of pulpwood species for farmers to get more realisation per hectare through increased output. A few mills have also been able to get the clean development mechanism (CDM) benefits for farmers.