IPMA urges stringent control on paper imports to safeguard industry interests; advocates for responsible import practices by genuine users

IPMA urges stringent control on paper imports to safeguard industry interests; advocates for responsible import practices by genuine users

- The basic customs duty (BCD) on import of paper and paperboard (HS Codes 4802, 4803, 4804, 4805, 4808 and 4810) should be increased from 10% to 25% (WTO Bound rate is 40%).
- Taking advantage of the nil / low import duty rates, these countries find India as an attractive outlet for diverting their excess inventory
- Import of paper and paperboard should be allowed only on the basis of Actual User License

The below Article on India’s Paper Industry and the Import Challenge is written by Mr Pawan Agarwal, President, Indian Paper Manufacturers Association (IPMA)

The Pulp and Paper Times

The Paper Industry is a key manufacturing sector in India with a long history and unique contribution in India’s independence struggle. Unfortunately, the Paper Industry has not received the kind of importance that it deserves. It is one of the very crucial sectors in the Indian economy and today, around 550 operational paper mills of the country are giving employment to more than 5 lakh families and this is the direct employment and if you count the indirect employment, it would be close to 20 lakh families.

Not only that, the Paper Industry has a major social and environmental role to play. The Clean India mission is not possible without the Paper Industry. Government has been working with sincerity to ban huge litter and environmental issues caused by single use plastic usage, and there is no other solution but paper for replacing single use plastic. So, paper is environment friendly, it is fully biodegradable, and it has got multiple usages. And today the paper packaging sector is growing and it is meeting the demand for environment friendly packaging solutions, Paper Industry needs to be supported from that perspective. Similarly, under the India literacy mission it is not possible to achieve 100% literacy without paper in the country.

India’s share in world production of paper is about 5% (5th largest producer in the world), with estimated production of around 22 million tonnes per annum (TPA).Per capita paper consumption in India is currently around 15-16 kgs, while the global average is 57 kgs, with 200+ kgs in developed countries. The demand for paper in India is growing at 6-7% per annum, making it one of the fastest growing markets in the world.

With a view to play its due role in the economic growth of the country, the domestic Paper Industry has undertaken large investments towards enhancing production capacities and modernisation of technologies. Currently there is adequate domestic production capacity in the country to meet the demands for almost all grades of paper. Unfortunately, indiscriminate increase in import of paper is putting paid to the efforts of domestic industry being Aatma Nirbhar.

Substantial quantities of paper and paperboard are being imported into the country at significantly lower costs with nil import duty from ASEAN, South Korea and Japan under the respective free trade agreements (FTAs), and preferential import duty from China under the Asia Pacific Trade Agreement (APTA).

Taking advantage of the nil / low import duty rates, these countries find India as an attractive outlet for diverting their excess inventory. Consequently, these export-led economies in Asia continue to target the fragile Indian market. Endeavour of major global players in the international market is to push large quantities of paper and paperboard into the Indian market. Leading the pack are manufacturers in Indonesia and China who enjoy substantial amounts of export incentives and other advantages.

India’s imports of paper and paperboard accelerated by 39% in Q1FY24 over Q1FY23, on back of an increase of 25% in entire FY23 over FY22, in volume terms, according to the latest data issued by the Directorate General of Commercial Intelligence & Statistics (DGCI&S).

Surge in imports was substantial in the years 2015-17 as well and anti-dumping duty was imposed in December 2018 on imports of uncoated copier paper for 3 years. During that period, imports came down substantially and it helped the domestic industry to survive. In November 2021, the Directorate General of Trade Remedies (DGTR), after due investigation, again recommended the continuation of the existing quantum of anti-dumping duty on imports of uncoated copier paper for a further period of 2 years. But the Ministry of Finance this time decided not to impose the anti-dumping duty.

Discontinuation of anti-dumping duty has yet again fuelled dumping in India by ASEAN players and in times to come, it will create more damage to the domestic industry if not corrected immediately.

Note: Data includes only HS Codes 4802, 4803, 4804, 4805, 4808 & 4810

Going forward, imports into India are expected to accelerate in view of the economic slowdown in China as well as large new paperboard capacities underway in China and Indonesia, as well as trade restrictions and import duties imposed by USA and European Union to protect their own domestic markets.

Given this state of affairs, domestic industry is being discouraged from further investments in capacities – which are necessary to meet the expected growth in domestic demand for paper and paperboard.

Apart from the overall negative impact of duty-free imports on the domestic Paper Industry, it is making most small and medium Paper Mills in India commercially unviable, and also leading to revenue loss to the Government and outflow of substantial foreign exchange. Out of over 900 Paper Mills in the country, currently only 553 are operational. This is against the Government’s initiatives of “Make in India”, “Aatma Nirbhar Bharat”, and “Vocal for Local”.

In light of the above, IPMA has requested the Government of India to favourably consider the following steps:

1. The basic customs duty (BCD) on import of paper and paperboard (HS Codes 4802, 4803, 4804, 4805, 4808 and 4810) should be increased from 10% to 25% (WTO Bound rate is 40%).

2. Since an increase in BCD will not impact the duty-free imports coming into the country under the FTAs, in order to provide a level playing field to the domestic industry, paper and paperboard should be kept in the Negative / Exclusion List (that is, no preferential treatment in terms of import tariff) while urgently reviewing the existing FTAs (ASEAN, South Korea and Japan) and formulating new FTAs.

3. Import of paper and paperboard should be allowed only on the basis of Actual User License so that only genuine users import the right quantity of paper for their consumption. The import policy should be changed from ‘Free’ to ‘Restricted’.

4. Non-Tariff Measures (NTMs) / Technical Barriers to Trade (TBT), like making BIS marking mandatory, should be imposed on imports of paper (like done for plain copier paper). Issuance of Quality Control Orders (QCOs) for different grades of paper will not only assure supply of quality products to the Indian consumers but also check the import of sub-standard products into the country.

5. Import of Stocklot (reject material, as opposed to prime quality) of all grades of paper should be banned (like done for coated paper under HS Code 4810).

6. Suitable safeguard, anti-dumping and countervailing duties on imports of various grades of paper should be expeditiously imposed, especially after the recommendation of the Directorate General of Trade Remedies (DGTR).

To sum up, a proper strategy needs to be devised for this industry which is an important cog in the overall economic wheel of the country and is vital for several present day’s Government missions. Indiscriminate imports should not be allowed to jeopardise the interests of the industry.
 

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