By Rameesh Kailasam and Dhiraj Gyani
India’s ancient history of writing materials started with stones, earthenware, shells and metal, which moved to pati (wood), bhurja (birch bark), tada (palm), ajina (leather), karpasika (cotton), and finally to paper. The first formal paper industry in India developed in Kashmir around the 15th century. The British rule enforced a ban of Indian hand-made paper in all government offices and import of machine-made paper from Britain. The swadeshi movement by Mahatma Gandhi attempted to revive the Indian handmade paper industry. Paper mills in India began using bamboo and, in 1925, the Bamboo Paper Industry (Protection) Act came into existence with business prospering during the Second World War.
The Indian paper industry today stands as a driving force behind the nation’s economic growth and employment generation. Its commitment to sustainability has allowed it to preserve natural resources, reduce carbon footprints, and provide millions of jobs in rural and urban areas. The industry stands as a vital contributor to the nation’s economic growth and employment generation. With an annual current growth rate of 6-7%, India ranks as the world’s fastest-growing market for paper consumption.
The industry has also embraced innovation and sustainable practices, and has reduced its carbon footprint through eco-friendly technologies and reforestation efforts. These initiatives have helped preserve natural resources and biodiversity while providing over two million direct jobs, particularly in rural areas, contributing to social welfare and poverty alleviation. The industry’s remarkable growth and contribution to the nation’s economy are evident from the increasing demand for paper and paperboards projected to reach around 23 million tonnes per annum by 2027(Crisil, June 2023).
Despite these achievements, challenges exist. The restriction under Foreign Trade Policy (FTP) for import of second-hand or refurbished capital goods has hurt the industry badly in its modernisation efforts as new machines cost thrice. If the industry is allowed to import second-hand or refurbished capital goods under the zero-duty Export Promotion Capital Goods (EPCG) scheme, it will enable lower capital investments and promote competitive industry growth.
Another challenge is that the Remission of Duties and Taxes on Export Products (RoDTEP) rates make Indian exports uncompetitive. The “Make in India” and export growth can happen only if RoDTEP rates are brought to the erstwhile MEIS levels. The current duty drawback and the FTP do not provide for export incentives against exports to countries like Nepal, Bhutan. Ideally, such exports should be treated on a par with exports to other countries. Also, rupee exports should qualify for the export incentives similar to rupee-denominated exports done through designated vostro accounts.
The present annual demand for paper and paperboards in India is approximately 20 million tonnes and expected to be around 23 million tonnes by 2027. India has signed several Free Trade Agreements (FTA), with ASEAN where import duties have reduced progressively from 10% to nil since 2014. The basic customs duty on paper and paperboards under the India-Korea CEPA, has reduced to nil from 2017. Customs Duty on imports from China has also been reduced to 6-7% in 2018. All these countries now find India as an attractive outlet for diverting their inventory.
Quantitative imports from China have increased by 114% and from ASEAN countries by 60% compared to the FY22 hurting the Indian paper industry. While the government has levied anti-dumping duty on imports of copier paper from Singapore, Indonesia and Thailand, duty-free and concessional-duty imports are still allowed for Korea, China and other ASEAN countries.
The industry is at a state where it is critical for the government to reassess these concessions, safeguard domestic interests, and promote self-reliance, ensuring sustainable growth and economic prosperity. Despite the emerging digital era, paper remains highly relevant due to need for physical records and experience of reading. Re-imposing customs duties on imports from these countries at rates similar to those applicable on non-ASEAN imports would level the playing field and support the Atmanirbhar Bharat vision.
Additionally, the requirement for pulp imported under specified exemption notifications to be consumed within six months poses challenges for manufacturers. Due to the demand for different grades of paper and seasonal fluctuations, consuming different types of imported pulp within the stipulated time becomes impractical. Ideally, the consumption time-limit should be eliminated or extended to at least one year.
There are also multiple challenges faced by the industry on the ease of doing business—including, but not limited to, a need for simplified Customs and FTP processes, RBI guidelines for the AD banks for a swift mode of closure of Free of Cost (FOC) cases for past periods, teething issues in ICEGATE system a well as Export Data Processing & Monitoring System Portal, etc.
In conclusion, ushering in growth, self-reliance and ease of doing business is paramount to reviving the Indian paper industry’s prosperity.
Writers are respectively, CEO, and senior director (policy and operations), IndiaTech.org