Fibreboard industry seeks duty cut

The sector has demanded waiver of 10% import duty on kraft paper

The Rs 6,000-crore corrugated (fibreboard) box industry has demanded a 10 per cent waiver of import duty on kraft paper to bring domestic prices down.

"The import duty cut will increase competition between domestically produced and imported kraft papers. This would begin a race for price cuts," Pradip Bosmaya, president, Western India Corrugated Box Manufacturers' Association (WICMA). Kraft paper comprises about 75 per cent of the raw material requirement for corrugated box making.

"As the current import duty is making imports expensive, domestic kraft paper manufacturers keep raising prices frequently," said Kirit Doshi, president, the Federation of Corrugated Box Manufacturers of India.

The corrugated box manufacturing industry is facing the heat from customers as they are unwilling to pay higher prices.

The fiber quality is also going downhill due to repeated recycling, which affects the performance of the boxes. There were two increases in the price of kraft paper recently.

All paper mills revised their basic price upwards by Rs 2,000 a tonne in the past two months. Also, the availability of raw material for manufacturing waste paper is poor even though the costs are steep.

Starch prices have also gone up by almost 50 per cent in the past one year along with the cost of adhesives. Galvanised iron wire, another raw material, firmed up by 35-40 per cent in the past one year. All these have affected the profitability of corrugated box manufacturers, said Bosmaya.

The industry is facing acute shortage of technical labour as well. Several new zones with many tax and excise benefits have been approved by the government.

These zones have attracted many skilled workers at high remuneration, increasing the cost of employment. Customers are also pushing manufacturers to install world-class technology at their facilities.

These would increase capital costs of manufacturers and products prices. The industry employs over half a million skilled and unskilled workers in about 5,000 units across the country.

Citing the advantages of corrugated boxes, Bosmaya said, "They not only protect products and facilitate transit, but also help conserve the environment since they can be recycled. The industry needs immediate government attention to prevent it from falling apart."