Domestic Paper Makers urge for Customs Duty on Paper Imports

Customs Duty on Paper Imports

Image source: RIT

Indian Paper Manufacturers request the government to levy customs duty on paper imports for preventing domestic mills from closure.

The gap between rapidly escalating demand and deescalating supply amid lockdown has become a major point of concern for Indian paper manufacturers. They fear domestic mills closure by foreseeing an increase in Chinese dumping for bridging this demand-supply gap. Hence, they have urged the government to impose customs duty on paper imports.

Increment in paper and paperboard imports

The import of this grade has risen by 16 percent between April and December 2019, amounting to 1.28 million tonnes. The figure for the same period in the previous year was 1.1 million tonnes. The country-wise comparison of paper and paperboard imports during April-December 2019 and in the same period the yesteryear:

CountryPaper & Paperboard Imports during April-December 2019 (in tonnes)Paper & Paperboard Imports during April-December 2018 (in tonnes)
China240,000199,000
ASEAN Countries276,300201,500
South Korea91,70078,100

Impact of lockdown on Indian paper industry

  • The coronavirus led nationwide lockdown of two months has affected production, halted distribution, and brought down sales of the paper products.
  • The untraded inventory is maintained at lower levels due to low off-take.
  • The receivables for commodities sold before lockdown are stuck.
  • Kraft Paper manufacturers are loaded with about Rs. 1,000 crore detention and demurrage charges on the imports of paper waste, which is used as raw material by the paper recycling industry in India.

The pandemic has forced domestic paper mills to remain shut, raising the possibilities of import-increase from China, South Korea, and ASEAN countries. As per the president of the Indian Paper Manufacturers Association (IPMA), A S Mehta, measures should be taken to restrict any such increase in imports.

The paper industry has requested the government to levy customs duty on paper imports from ASEAN countries, China, and South Korea to save domestic mills from shut down. The exemption in the demurrage and detention charges for kraft paper manufacturers has also been demanded.

According to the president of the Gujarat Paper Mills Association (GPMA), Sunil Agarwal, interest-free working capital loans and exemption from Goods and Services Tax (GST) must be provided to kraft paper industry for survival. And, the repayment of this loan should be allowed in 120 installments.

However, as per Mehta, the past two years have been great for Indian Paper Industry in terms of financial performance. And therefore, the industry may not require additional working capital for its survival, although some pressure can be expected on mills during Q1 of the financial year 2020-21.

The pandemic has attacked the Indian paper industry during the peak demand season. Due to school and university examinations, the demand for printing and writing paper and other stationery items maximizes during this period. Mehta claims the rebinding of printing and writing paper demand, once the academic year 2020-21 starts.

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