Paper prices unchanged despite excise duty cut

Paper manufacturers have not changed the prices of their products despite the excise duty on paper being cut by 4 per cent in the Budget this year.

The companies said they were faced with a huge cost-push from the raw material side and were not in a position to cut prices.

Considering a price range of Rs 36,000-40,000 a tonne for various categories of paper, companies have got an average relief of Rs 1,500-1,600 a tonne following the excise cut.

"We are continuing with the old rates for the time being. We may arrive at a decision on prices soon, after taking into account the prices of raw materials such as coal," said A Velliangiri, deputy managing director, Tamil Nadu Newsprint and Papers.

Finance Minister P Chidambaram announced a cut in the excise duty on writing, printing and packing paper from 12 to 8 per cent.

At a post-Budget meeting with an industry association on Wednesday, Chidambaram appealed to the industry to lower the paper prices.

Paper prices have been increasing continuously owing to rising prices of pulp and other raw materials.

Uncoated paper prices, for example, have increased by almost 10 per cent since February 2007 and are now selling at Rs 40,000 a tonne.

"Pricing of any product is a function of demand-supply situation and has little to do with the taxation policy. With the excise cut, we will be able to offset part of the input cost," said Pradeep Dobhale, president, Indian Paper Manufacturers' Association and chief executive of ITC's paper division.

V Kumaraswamy, vice-president (finance), JK Paper, said the company had not been able to recover from the consistent rise in the prices of raw materials during the last few months.

"The 4 per cent excise cut will provide a cushion against the rising input costs," he said.