The Rs 25,000 crore domestic paper industry is seeking protection from cheap imports from Indonesia and China. It has urged the government to raise the basic customs duty on paper and paper boards to 15 per cent from the current applicable rate of 10 per cent.
In a memorandum to the finance ministry, representative of Indian Paper Manufacturers Association (IPMA) has demanded to levy safeguard duty on paper industry also.
“In view of the global meltdown, the Asian paper market has become very vulnerable and major players in Indonesia and China are all set to push large quantities of coated and uncoated wood-free grade paper into the Indian paper market. China has reportedly re-introduced export incentive recently which was withdrawn following protests from other global players," said R Narayan Moorthy, secretary general, IPMA.
“The paper market is rife with news of impending imports of a large quantity of wood-free grades of paper in 70 GSM for which sundry order-booking at a price of $680 per tonne and lower is already happening. The first lot of 5,000 tonnes is expected any time soon," states the representation.
In the representation, IPMA has asked for disbanding multiplicity and introduce uniformity in DEPB rates as an analogy to Custom Duty rationalisation. IPMA has asked for applicability of a uniform DEPB rate of around 12 per cent to all varieties of paper and paper boards.
The DEPB scheme is the only instrument of incentive utilised by the paper exporting units in India. There are quite a few export deterrents that curb export competitiveness of the Indian paper industry such as low DEPB rate applicable to paper, paper boards and paper products besides high cost of raw material.
The immediate measures are needed to protect domestic paper industry from the cheap imports from Indonesia and China. Representatives from these two big paper manufacturing countries are roaming in India and talking to Indian paper consumers to reduce their inventory pile-up.
Because of the global economic slowdown, inventories to the tune of thousands of tonnes equivalent to more than two months of their production capacity are lying with manufacturers in these two countries.