The government has maintained the effective rate of duty on paper, paper board and articles at four per cent while raising the duty for certain stationery products like folders, letter pads and file covers to eight per cent. Notebooks and exercise books have also been exempted.
The move will have no impact whatsoever on paper consumption. “The move has a neutral impact on us and there will be no change in the price of paper. However, this will help maintain the consumption demand,” said B Hariharan, director (finance), Bilt, the country’s largest paper producer.
Demand for paper tracks gross domestic product (GDP) growth and the demand is currently growing at close to seven per cent.
A hike in duty on paper would have forced paper manufacturers to pass on the increase either partially or completely to consumers. “In case of a hike, we would have tried to pass on the change. But in current circumstances passing on the entire hike would have been difficult. Paper producers might have had to absorb a part of the hike,” said another paper industry official.
Items like folders, paper labels, file covers, various business forms and other articles of stationery, paper or paperboard, on which the duty is being hiked from four to eight per cent, is produced only by small and marginal units. This will have an impact on such units.
