Speaking to The Financial Express, Parmod Jain of IARPMA alleged that prices of some essential raw materials like agro residues and waste paper have gone up by 50 per cent and power cost by 25 per cent in the last one year. The diesel prices have been increased recently by 35 per cent and this has affected the mills having diesel-based gensets.

Adding to the woes, the government has raised the excise duty on non-wood based paper to 16 per cent to make it at par with that on wood based paper. Besides there is a uniform sales tax levied by the states at 8 per cent.

Jain alleged that the government has raised the excise duty on non-wood based paper in contravention to the recommendations of Raja Chelliah Committee which stated the need for keeping duty on a commodity like paper at a reasonable level. The committee also suggested that `other full exemptions to newsprint, handmade paper, paper from bagasse etc may continue'.

He said the selling price of 16 BF paper has increased to Rs 15,000 per tonne from Rs 11,500 a tonne in March 2000 and Rs 11,000 in March, 1999.The selling price of 20 BF paper has increased to Rs 16,000 a tonne from Rs 12,500 a tonne in March, 2000 and Rs 12,300 a tonne in March, 1999. But still the industry has not been able to raise the prices of its products to such a level so as to fully offset the adverse impact of input cost increases. This can be seen on comparison of prices prevailing in 1994-95 and current prices.

If the price index level of the government is taken into account since 1991, the paper industry has not been even able to get the increase of price index whereas for all other converter products and other consumer the prices have been raised.

In addition, Jain further alleged that the paper consuming industry has never passed on the benefits to its customers when the paper prices fell sharply in 1999. The publishers and corrugated industry which use papers as their input materials kept on increasing their prices over a period of last five years even when at times the paper prices came down.

He said that in the last five years the industry has passed through an unprecedented recession where they had to sell paper below the production cost. Many units were closed and most of them could not service their debts to meet the statutory payment obligations. The industry provides direct employment to three lakh people and indirect employment to about five lakh people. The industry is producing eco-friendly paper by converting `waste to wealth' by using renewable agro residues like rice straw, wheat straw, bagasse, jute, jute waste and waste paper. This reduces dependence on scarce forest resources.