Corrugated box manufacturers are facing rising costs of raw material, particularly of kraft paper, which accounts for around 70 per cent of their inputs. These boxes are used for packaging a range of products, including engineering goods, pharmaceuticals, processed foods, textiles, fast moving consumer goods, fruit and vegetables.
“Raw material costs have increased by 25 per cent in the last six months. Kraft paper price and labour costs have increased by an average of 20 per cent each,” said Vikash Goyal, joint secretary of the Indian Corrugated Case Manufacturers Association (ICCMA).
The association, which represents around 200 manufacturers from across the country who operate automatic units, has asked the government to reduce customs duty on imported kraft paper from the current rate of 10 per cent.
Goyal said the 10 per cent customs duty makes import of kraft paper unviable. At present, imports are negligible and Hyderabad-based manufacturers source inputs from Maharashtra and Gujarat as well as locally.
Rahul Jain, managing director of city-based Dhanalakshmi Packaging, said,” Kraft paper prices have increased by at least 25 per cent in the last four months. The prices of almost all inputs — adhesives, wire, labour, power — have increased. Overall, production costs have gone up by 30 per cent.”
The current average price of kraft paper is around Rs 26,000 per tonne, according to Jain. As a result of the rising costs, the company has cut its output by 15-20 per cent, he told Business Standard.
Jain said, “Prices are driven by trends in the international market. At least this year, we hope they will be flat.”