Exempt import duty on special grade paper board: Kandarp Singh, Tetra Pak

The Indian food processing sector continues to face endemic and perennial wastage of perishables (especially milk, fruit and vegetables) through the food value chain. Identifying and implementing appropriate post-harvest handling, storage and transportation technologies in a country that faces high and recurring food safety issues remains our nation’s highest priority. A proven solution to eliminate food losses is the combination of aseptic (Ultra High Temperature or UHT) processing and aseptic packaging - a breakthrough technology the world over as well as here in India.
 
Aseptic packaging technology provides preservative-free, safe and pure milk and beverages capable of being distributed anywhere across rural and urban India under ambient conditions (ie without refrigerated storage or distribution). Every single day in India, 16 million people – from everyday consumers to common fishermen to army jawans - consume brands like Amul and Nandini milk and Dabur Real juices in aseptic carton packages and enjoy good health, taste and convenience and of course unparalleled food safety. Better processing and packaging technology such as aseptic packaging thus benefits the entire food value chain – farmers, processors, retailers and consumers – bringing to all, increased incomes and value-addition, livelihoods, employment and health.
 
Aseptic cartons are made of a six-layered laminated packaging material consisting primarily of paper board. For the aseptic carton to be able to deliver uncompromised and unmatched food safety, the paper board needs to have a certain desired strength – which is delivered by having a special-grade kraft/ bleached paper board. Due to the current non-availability of indigenous produce, this special-grade paper board needs to be imported. In the absence of a dedicated import code under the present customs import tariff, this imported paper board attracts an aggregate import duty of 21.93% (effective at 11.5% net-off CENVAT credit). Since the paper board constitutes about 50-75% of the final laminated packaging material by weight as well as cost, the impact of this duty on the final cost of the laminated packaging material becomes substantial. Thus, the incidence of high import duty on special-grade kraft paper board significantly impacts the cost of the packaged product.
 
Exemption of import duty on the paper board - or its rationalisation from 10% to 5% - will reduce the cost burden and make milk and juices in aseptic carton packages more affordable, allowing many more millions from all geographies and income groups to have greater access to nutritious food of the highest safety standard.
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Kandarp Singh is Managing Director - South Asia Markets of Tetra Pak, a global food packaging and processing company