Indian paper manufactures’ elongated pique to have a ban on Chinese imports might find solace as Government is mulling a hike in import duty by 10 to 25 percent.
Paper Industry Chinese Rivalry
Recent statistics released by DGCI&S unveils that Rs 1,773-crore worth paper imports from China have permeated Indian markets for 11 months from April to February 2020. While the corresponding year 2019 observed imports worth Rs 1,831 crores in the entire 12 months. The odiousness is that ASEAN imports on the other hand had been Rs 1,830 crore in 2019 which rose to 1,870 crores in the first 11 months of 2020. The hike in import duty will bring the expected succor to Indian paper manufacturers.
Covid-19 added fuel to fire
Already slugged paper industry due to Chinese imports is now also having its fortuitous rendezvous with the Covid-19 pandemic. The pandemic further wrecked the markets brutally which were hitherto retarded by cheap paper imports from China and ASEAN. The cheaper Chinese imports however act as an antidote to the Government’s recent compensating measures to check pandemic impact.
Bullet to Wallet LAC confrontation
The LAC confrontation can be pounced by wallet means. The hike in import duty will not only repose the Papermill owners but also propitiate the brewing anti-Chinese sentiments and that too not by a bullet but by the wallet. Such an enhanced import duty will provide the needed impetus for domestic production and consumption and thereby avoiding subjugation to imports.
Trade agreements review
At present India is having ‘Free Trade Agreement’ (FTA) with China leading to negligible tariffs or prohibitions on imports from China. The enhanced import duty also entails a review of FTAs. Primarily, coated paper and paper board lots are covered by HSN Code 4810 and hence recently a complete ban on import of such stock lot has also been advocated by DPIIT. The surge in cheap imports coupled with outpouring inbound shipments is serious that can be addressed and countered by reviewing the trade agreements of the country.
Waste paper imports
Recycling of paper offers several advantages including environment protection but the corresponding paper recycling industry is not having the same coffers. Though there is nil duty on waste paper imports this benefit is eclipsed by no duty exemption on key raw materials such as pulp and wood logs. This is not only resulting in a deep hole in the industry pockets but also a see-saw situation for the paper industry.
The respite for paper manufacturers would be propitious and is indicatively providential from recent measures taken by the Government like its pulling out from 16 -nation Regional Comprehensive Economic Partnership (RCEP) agreement in November last year.