India's paper imports up 30% in April-September 2019 at $706 million

Data shows during April to September 2019, imports rose to $706 million from $602 million during same period a year ago

The imports of paper (excluding newsprint) have gone up by around 30 per cent in volume terms and by 17.28 per cent in Dollar terms during April to September compared to same period last year.

Data shows during April to September 2019, imports rose to $706 million from $602 million during the same period a year ago. 

In terms of volume, it has increased to 887.8 thousand tonnes from 683.5 thousand tonnes, according to Directorate General of Commercial Intelligence & Statistics (DGCI&S) 

In terms of value, the total imports grew 19.69 per cent to Rs 4,941 crore in the first six months of the fiscal, as compared to Rs 4,128 crore during same period last year.

Imports in terms of volume from China and ASEAN went up by whopping 40 per cent and 75 per cent respectively, shows the data.

Indian Paper Manufacturers Association (IPMA) has written to the Ministry of Commerce & Industry and asked for imposition of measures, including hike in the basic customs duty, and also review of India’s Free Trade Agreements (FTAs) that have extended preferential tariff treatment to import of paper and paperboard at significantly lower costs to the disadvantage of domestic industry.

According to IPMA, under the India-ASEAN FTA and India-Korea CEPA, basic customs duty on paper and paperboard has been progressively reduced over the years, and currently stands at zero per cent.

Further, under the Asia Pacific Trade Agreement (APTA), India has also extended import tariff concessions to China (and other countries) and reduced the basic customs duty from the existing 10 per cent to 7 per cent on most grades of paper.

"India imported paper and paperboard (excluding newsprint) to the tune of Rs 5,000 crore during the first six months of current fiscal while domestic industry has more than adequate capacity to meet the demand. Domestic investments will not be meaningful if imports are allowed at nil rates," said A S Mehta, President IPMA.

India is arguably the fastest growing paper market in the world. Unfortunately, growth in demand is being met increasingly by imports, with under-utilisation of existing domestic manufacturing capacity, Mehta added

India’s paper industry is operating at 80 per cent of the capacity, which is low for a high capital intensive and continuous process industry like paper. Except a few companies, most of the sector is stressed and moving towards commercial unviability on account of escalating duty-free imports, said the Association.

The paper industry, especially wood-based paper manufacturers, supports about 5 lakh farmers who are engaged in agro forestry, and supply raw material to the paper mills.

Cheaper imports are not only hurting the interests of domestic manufacturing, but a large number of farmers, too, who supplement their incomes by engaging in agro forestry, added Rohit Pandit, Secretary General IPMA.

He welcomed the recent announcement of the decision to initiate the review of the ASEAN-India Trade in Goods Agreement (AITIGA) and the decision of the Indian Government to not sign RCEP in its present form.

According to IPMA, as a consequence to global trade tensions, the Indian Pulp & Paper Industry has become very vulnerable to dumping of large quantities of paper and paperboard into the Indian market. Leading the pack are manufacturers in Indonesia and China who enjoy substantial amount of export incentives and other advantages like access to cheap raw material and inputs.

The conventional markets for China and Indonesia have been the USA and EU. In both these markets, anti-dumping/anti-subsidy tariffs have been imposed on import of paper/paperboard from China and Indonesia. There is significant excess capacity of paper and paperboard in these countries. Taking advantage of the low import duty rates, these countries find India as an attractive outlet for diverting their excess inventory, said IPMA.

The association said, in the last eight years, imports (excluding newsprint) have grown at a compound annual growth rate (CAGR) of 14% in volume terms (from 0.54 million tonnes in 2010-11 to 1.48 million tonnes in 2018-19), and 13 per cent in value terms (from Rs 3,411 crore in 2010-11 to Rs 9,134 crore in 2018-19). In the same period, imports from ASEAN and Korea increased at a CAGR of 34 per cent and 42.5 per cent respectively in volume terms.

Increased import of paper and paperboard is severely impacting the economic viability of many paper mills especially small and medium paper mills in India. According to Central Pulp & Paper Research Institute (CPPRI) data, out of 861 paper mills in the country, only 497 are currently operational.