Faced with the onslaught of cheaper imports, the domestic paper industry — writing, printing and newsprint — could come under severe pressure to cut prices in near future. As of now, the companies have decided to maintain last month’s prices.
“We have kept prices unchanged. However, in the event of a continuous pressure from cheaper imports, we might be required to cut prices,” said A K Ghosh, vice president (sales), JK Paper.
Ghosh pointed out that the monthly import of coated paper has seen a five-fold jump to 10,000 tonnes vis vis 2,000 tonnes last year. This imported paper is nearly 15 per cent cheaper compared to the domestic price of Rs 52,000 a tonne even with an applicable duty of 16 per cent.
The paper industry has been seeking safeguard duties on imports. “In view of the
fact that dumping can happen from countries like China and Indonesia, there is a justification for imposing safeguard duties on both coated and uncoated paper,” said B Hariharan, director (finance), Bilt, the country’s largest paper producer. The industry has made representations to the government seeking safeguard duties on import.
Ghosh also said there has been a slump in domestic paper demand despite the government spending on education. “There has been a decline in overseas outsourcing orders in publishing while demand from software and e-ticketing business is also down,” he said.
Newsprint manufacturers too have decided to maintain prices. “Mills are not in a position to cut prices further. Any further cut would force mills to shut down,” said V D Bajaj, executive director, Rama Newsprint and Papers Ltd.
Newsprint prices remained highly volatile last year. Prices (of the 45 gm per square metre or GSM variety) had jumped nearly 55 per cent since January 2008 to Rs 40,000-42,000 a tonne in the July-September quarter exerting a huge pressure on margins of publications.
It was only from October that prices have begun to soften. Presently, prices are in the range of Rs 24,000-26,000 a tonne. Even the cost of imported newsprint, which accounts for about 50 per cent of the 1.6 million tonnes annual consumption, is in the same range after abolition of import duty. If the rupee strengthens against the dollar, this could get cheaper.
Even newsprint consumption is on a decline as most newspapers have cut down the number of pages following the decline in advertisements while some have closed a few editions to cut costs.
