The surge in paper imports by 60% in the first six months of the fiscal has led the Indian Paper Manufacturers Association (IPMA) to write to the Centre seeking an end to preferential tariff treatment to importers. It has also urged the government to undertake trade remedial measures and impose either anti-dumping or safeguard duty on import of paper. “Unbridled growth in import of paper is hurting the domestic paper industry and the country. The industry does not enjoy a level playing field vis-à-vis duty-free imports from countries where cost of production of paper is a fraction of cost in India as raw material, inputs and energy is much cheaper and easily accessible,” says IPMA, in a communique to ministry of commerce & industry. Since paper industry is a huge value generator for rural population, engaged in agro-forestry, the opportunity to push the growth in domestic paper industry should not be squandered, it remarked.
Following a 28% year-on-year increase in import in financial year 2016-17, the import of paper and paperboard in India has gone further up by 60% in the first half of financial year 2017-18, says the latest data released by DGCIS (Director General of Commercial Intelligence and Statistics).
Import of paper and paperboard touched an all-time high of 10.5 lakh tonne in the first half of the current fiscal against 6.5 lakh tonne in the corresponding period in the previous year. Import of paper from Asean (Association of South-East Asian Nations) countries, with nil rate of import duty under free trade agreement, has more than doubled from 0.8 lakh tonne to 2.1 lakh tonne during the period.
“Though India is one of the few growing markets for paper, most of the growth in demand is being met by imported paper while domestic capacities are lying under-utilised. Indian paper industry has invested $2-3 billion in last decades and we are game to ramping up the production further. What is hampering the expansion of domestic industry is the imports. If the preferential treatment to imports can be done away with, the Indian paper industry can grow and contribute further to the growth of rural economy,” Saurabh Bangur, President, IPMA told FE. Last month, IPMA filed a petition on this before the anti-dumping cell of ministry of commerce and industry.
In the last six years, imports of paper and paperboard have risen at a CAGR (Compounded Annual Growth Rate) of 15.8% in value terms (from Rs 3,411 crore in 2010-11 to Rs 8,237 crore in 2016-17), and 17.6% in volume terms (from 5.4 lakh tonne in 2010-11 to 14.2 lakh tonne in 2016-17).
According to Saurabh Bangur, inadequate raw material availability is a constraint for the paper industry. Besides availability issues, mill delivered cost of domestic wood in India is higher by almost $ 30-40 per tonne as compared to other Asian countries. Therefore, cost of paper production in India is higher by $100 per tonne.
The central government’s policy of extending preferential tariff treatment to import of paper and paperboard under trade agreements is giving further fillip to imports. Huge quantity of paper and paperboard is imported into the country at significantly lower costs under the aegis of the FTAs, says IPMA.
Under the India-Asean FTA, import duties on almost all tariff lines under paper and paperboard have been progressively reduced, and from a base rate of 10%, the basic customs duty came down to 0%. The conventional markets for China and Indonesia have been the US and EU. In both these markets, anti-dumping and/or anti-subsidy tariffs have been imposed on import of paper and/or paperboard to protect their domestic industries.
Further, the economic slowdown in developed economies has led to significant excess capacity of paper and paperboard in these countries. According to IPMA, thanks to the low import duty rates in India, the paper trade in other countries find India an easy prey for diverting their excess inventory.
Source: financialexpress.com