Although India has sufficient paper production capacities, imports of paper and paperboard into India are leapfrogging in recent years.
Indian Paper Manufacturers Association (IPMA) has urged finance minister Nirmala Sitharaman to bring the commodity under the negative list as it would help do away with preferential tariffs treatment to imports and give a level-playing field to domestic mills.
“Indian paper mills have recently invested huge amounts to upgrade to clean technologies, product quality and farm forestry. More investments are in the pipeline. All this will be unproductive if imports are allowed at nil rates,” AS Mehta, President, IPMA told FE.
Firstly, the current FTAs (Free Trade Agreements) need to be reviewed, according to the pre-Budget note, that paper industry has put forward to the ministry of finance.
Both under India-ASEAN FTA and India-Korea CEPA (Comprehensive Economic Partnership Agreement), basic customs duty on paper and paperboard has been gradually reduced, and currently stands at 0%.
Secondly, the basic customs duty on import of paper and paperboard should be hiked from the current level of 10%. Import of paper and paperboard should be allowed only on the basis of Actual User License so that only genuine users import the paper.
Thirdly, IPMA has urged a uniform rate of GST on different grades of paper, specifically seeking reduction of GST on tissue/toilet paper and poly-coated paper from 18% to 12%.
Although India has sufficient paper production capacities, imports of paper and paperboard into India are leapfrogging in recent years. Indonesia and China are leading the paper importers to India, enjoying substantial export incentives. The US and EU used to be their traditional markets, but when they raised their tariff barriers, Indonesia and China have turned to vent their excess inventory in India, said Mehta.
In the last eight years, paper imports have surged at a compound annual growth rate (CAGR) of 13.54% in volume terms (from 0.54 million tonne in 2010-11 to 1.48 million tonne in 2018-19), and 13.10% in value terms (from `3,411 crore in 2010-11 to `9,134 crore in 2018-19). In the same period, imports from ASEAN and Korea increased at a CAGR of 33.51% and 42.46%, respectively, in volume terms.