Indian paper industry seeks higher tariff wall to ward off Chinese dragon

Written by M Sarita Varma | Thiruvananthapuram | Updated: Jan 6 2010, 05:21am hrs
The US governments recent move to clamp anti-dumping duty against paper imports from China and Indonesia has started giving sleepless nights to Indian paper manufacturers. Jittery about large-scale import diversion, the Indian Paper Manufacturers Association (IPMA) has urged the Centre to raise tariff walls or at least retain the 10% current level of import duties.

The paper industry estimates that the significant economic slowdown in developed economies has led to unutilised capacity for paper/paperboard manufacturing in export-dependent economies like China and Indonesia.

In a pre-Budget memorandum to the Centre, the paper industry has also categorically mentioned the US tax move against Indonesia and China. The US governments recent decision to impose anti-dumping duty against import of paper from China and Indonesia will result in large-scale diversion of excess capacities to India, said IPMA, in a note.

Imports in last one year shows signs of injury to domestic producers, R Narayan Moorthy, secretary general, IPMA told FE.

There has been a significant spurt in coated paper imports in the country in the first quarter of current financial year. The coated paper imports in the first quarter have gone up by as much as 70% when compared to the last quarter of 2008-09.

Since the import prices are coming down, there is now a threat of serious injury as there is no support to domestic industry by way of retaining the import duties, Moorthy said.

As against an import of 25,097 mt in January-March quarter, the import of coated paper went up to 42,971 mt in the April-June 2009 quarter. The import of coated paper from China has gone up from 13,345 mt in January-March 2009 quarter to 19,165 mt in April-June 2009 period.

IPMA has welcomed the Centres recent move to create a technology upgradation fund (TUF) for the paper industry. However, TUF can have teeth only if, at least Rs 400 crore is alloted as interest subsidy. Otherwise paper industry may not be able to attain sizeable technological leap, said IPMA. For upgradation of the mills, at least Rs 3,000 crore will be required.

All indigenous mills are now consciously focusing on cleaner technologies to improve productivity as well as quality of output. Domestic industry needs to be internationally cost and quality competitive. So it is essential that the paper industry has access to timely and adequate capital at internationally comparable rate of interest to upgrade technologies.

Meanwhile, in another submission, IPMA has sought pegging excise duties on specialty papers like paper tissues, vegetable parchment paper and plastic coated paper on par with the rest of the paper varieties. The paper industrys contention is that to promote healthy lifestyle among masses, the products which are biodegradable and contribute to cleanliness and hygiene deserve strong fiscal support from the government.