Paper body calls for govt fund

Wants a modernisation fund to push up production and finance small players.

The paper industry is pushing for a modernisation fund to prop up production and finance small players.

This will be on the lines of the textile upgradation fund scheme (TUFS). The Indian Paper Manufacturers Association (IPMA), the paper industry's representative body, has made representations to the ministries of industry and finance. The fund, it claims, would increase productivity by up to 25 per cent without adding capacities.

"The industry ministry has supported the idea and is working on it. The final approval will come from the finance ministry," said Pradeep Dhobale, president, IPMA.

The association has indicated to the ministries that the size of such a fund should be around Rs 2,000 crore. "The fund should be available for a period of five years and the money may be used to subsidise the loans taken from banks for modernisation," IPMA said.

"The main beneficiaries of the fund would be the small and medium units which do not have enough funds and are able to procure loans only at high interest rates. Such modernisation is needed to induce efficiency, save energy and reduce pollution. Of the 8.5 million tonnes of domestic paper capacity, over 5 million tonnes is in the small and medium sector.

IPMA has also demanded a uniform excise duty of 8 per cent on paper (instead of the existing slabs of 8, 12 and 16 per cent on different categories) and the maintenance of customs duty at current level of 10 per cent. In the last budget, the government brought down the customs duty on paper to 10 per cent from 12.5 per cent, with the reduction in peak customs duty to 10 per cent.

"Imports have gotten cheaper since the last budget due to the duty reduction as well as appreciation of the rupee," said Dhobale. Any further reduction in customs duty would impact domestic producers and stall investments.