Indian paper mills are on edge as the Centre is pulling up its socks for the next round of RCEP (Regional Comprehensive Economic Partnership) parleys at Beijing, China in August first week. The Rs 70,000-crore Paper industry has sent a communique to commerce ministry, urging the government to be wary enough to keep paper in the negative list, under the proposed RCEP.
“We have pumped huge capital investment on ramping up capacities recently. If the imports surge, these investments will go down the drain,” IPMA (Indian Paper Manufacturers Association) president AS Mehta told FE. “Besides, this will disrupt industry’s value chain linkages with farmers, that led to enhanced rural incomes, employment and greening of India,” he said.
Apprehensions are rife that the RCEP agreement to be thrashed out among 16 member countries would press India for eliminating its import tariffs on paper and paperboard. India, China, South Korea, Japan, Australia, New Zealand and the 10-member ASEAN countries constitute the RCEP. Of these, China and ASEAN countries top India’s paper and paperboard importers. In growth rate, Indian paper industry had recently outstripped China, the world’s largest paper producer.
According to the note that IPMA submitted to commerce ministry, paper and paperboard should be retained in the negative list. This is “to ensure that the capital already invested and proposed to be invested in further capacity creation by Indian paper industry is safeguarded, incentivised and grown further,” says the note.
FTAs (Free Trade Agreements) had been a dampener for Indian paper mills. Basic customs duty (BCD) on paper and paperboard is zero, both under India-ASEAN FTA and India-Korea CEPA. Last year, for China, India had even trimmed its BCD for several grades of paper from 10% to 7%. “Unlike India, large-scale buyers like US and EU have imposed anti-dumping duties on paper and paperboard originating from some of these countries,” says Rohit Pandit, secretary general, IPMA.
In the last eight years, imports are up by a compound annual growth rate (CAGR) of 13.54% in volume terms and 13.10% in value terms (from Rs 3,411 crore in 2010-11 to `9,134 crore in 2018-19). In the same period, imports from ASEAN and South Korea, with whom India has FTAs, has increased at a CAGR of 33.51% and 42.46% respectively (in volume terms).
Source: financialexpress.com