The association has also sought a moratorium for two years on 50 per cent of excise payment to improve liquidity. "These measures will help the domestic paper industry tide over the current demand recession coupled with decline in prices, IPMA chairman Harsh Pati Singhania said in a pre-budget memorandum to the finance ministry.

He said repayment of loans by several units was in default due to lower production and price evaluation than anticipated and the repayment schedule needed to be reworked based on new projections. Singhania said payment of accumulated interests should be deferred for the next two years and renegotiated with longer payment schedule and lower interest rates. As the stocks with paper mills had gone up from an average of six to seven days to 30 days, IPMA chairman said government along with its various departments andagencies could help domestic mills by increasing its paper stock.

However, he said, this would be a temporary measure and the stocks could be brought down once the demand for paper was back to normal. Singhania alleged that large scale dumping of paper was taking place under the garb of newsprint and demanded clear classification of various categories of paper. The existing import duty of five per cent on newsprint was much lower than 30 per cent applicable on paper.

Stating that IPMA was not against imports by actual users, Singhania said "there should be a trigger mechanism for import duty on newsprint and paper." The association has suggested a floor price of $600 a tonne for white wood-free printing paper and similar appropriate price for newsprint to curb clandestine imports. "Should imports take place at a cheaper price than this benchmark price, higher rate of import duty to that extent should be levied," Singhania said.

In order to give a push to languishing paper exports, the government shouldincrease the Duty Entitlement Pass Book (DEPB) rate to realistic levels. As domestic paper mills were at a disadvantageous position on the raw material price front, Singhania asked the government for an early plantation policy, which would allow corporates in reforestation of degraded land. "Any further delay in policy direction would cripple the industry to a point of no return and country would have to spend over Rs 9,000 crore for import of paper and newsprint," he added.