Paper industry seeks increase in import duty, review of trade pacts

New Delhi, Dec 28 The Indian Paper Manufacturers Association (IPMA) has urged the government to curb high imports of paper and paperboard by raising import duty to 25 per cent.

In its pre-budget consultations with the Ministry of Finance, the industry body has asked for curbing indiscriminate imports which are turning into an obstacle for India to become self-reliant in the diversified paper sector, which holds great opportunity for employment generation and support to farmer community.

"Import of paper and paperboard into India has been steadily increasing, aided by the government's policy of extending nil import tariff treatment to paper and paperboard under the free trade agreements (FTAs) and other bilateral and multilateral trade agreements and pacts," the IPMA said.

According to AS Mehta, President of IPMA, high cost of raw material coupled with significant increase in fuel cost and other inputs has resulted in a substantial increase in the cost of manufacture of paper and paperboard.

While domestic industry is operating under extremely challenging conditions, substantial quantities of paper and paperboard is imported into the country at significantly lower costs at nil import duty under the aegis of the free trade agreements, Mehta said.

Both under India-ASEAN FTA and India-Korea CEPA, import of paper in India is currently done at nil import duty. Under the Asia Pacific Trade Agreement (APTA), India has extended import tariff concessions to China (and other countries) and offered 30 per cent margin of preference, thereby reducing the basic customs duty from 10 per cent to 7 per cent on most grades of paper, an IPMA statement noted.

"Imports at concessional or nil rates from low-cost producing countries, with assured access to cheap raw material and inputs, is discouraging domestic investment in capacity expansion, which is necessary to meet expected growth in domestic demand for paper and paperboard," said Mehta

He added that the fall in investments will have a multiplier adverse impact on the value chain, including farmer community with whom the industry has developed strong linkages.

According to the industry body, India is one of the fastest growing markets for paper in the world. From current paper consumption of about 20 million tonnes per annum (TPA), the domestic consumption is projected to rise to 23.5 million TPA by 2024-25.

However, it is feared that most of the increase in demand will be met by imported paper. Duty-free imports are making most small and medium paper mills in India commercially unviable, and also threatening the livelihoods of thousands of farmers engaged in agro-forestry and supplying wood to paper mills, IPMA said, adding that it is against the government's vision of 'Atmanirbhar Bharat'.

The IPMA has asked for increase in the basic customs duty on import of paper and paperboard to 25 per cent, the WTO bound rate being 40 per cent, it said.

At the same time, the IPMA has called for an urgent review of the FTAs and placing paper and paperboard in the negative list. The import policy on paper should be changed from 'free' to 'restricted' to curb the unfair practices such as under-invoicing and dumping to avoid import duty payment.

Further, it has also recommended the government to set up a Paper Import Monitoring System to check the dumping of paper in the country.