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Custom duty scrapped on newsprint similar move is envisaged on wastepaper

The bottom-line of all newsprint manufacturers in the country is already affected following a substantial fall in the price of newsprint in the international market during the last couple of months. The situation may worsen with the further 3% cut in the custom duty on the imported newsprint announced by the Union Government. Recently the finance ministry has exempted newsprint, glazed newsprint and light weight newsprint used for printing Newspapers & magazine from custom duty.

The fall in the cost of newsprint is may be good news for consumers but it is certain to have an adverse impact on the domestic manufacturers of newsprint. They would be forced to further reduce their prices to match the landed price of imported newsprint. This will have a negative impact on their profitability and even few plants might be compelled to stop their production.

Moreover the newsprint manufacturers who had switched over to production of writing & printing paper would also be forced to either switch back to newsprint or reduce the prices of their product because the scenario in writing & printing segment also is not good and excess supply is foreseen in the future.

An ebullient interaction with prominent newsprint manufacturers on duty cut, drawback rates which had hit the paper industry and their expectations from the government.

PS PatwariMr. P S Patwari,

Executive Director,

Emami Paper Mill Ltd.

The import duty on Newsprint will force us to reduce our prices as our prices our moving in tandem with the landed price of imported newsprint. If the manufacturer has to remain in the market, they have to compromise the prices and it will affect the profitability of the Indian manufactures. Our major competition is from the international players as 50% of our newsprint requirement is being imported. All the newsprint manufacturers across the globe will lose a lot of money and even few of the big and small newsprint manufacturers might get closed.

The government has to support the newsprint manufacturers by offering packages, else the newsprint industries will close down and all the newsprint would be required to be imported. Relief in the form of waiver on import duty on waste paper, spares, chemicals & other inputs along with excise duty, VAT etc is envisaged which might help the industry but still there will be no profitability at least this year.

VD BajajMr. V.D. Bajaj,

Executive Director,

Rama Newsprint Ltd.

Near about half of the India’s consumption of newsprint is met from imports and the rest is supplied from the domestic manufacturer. Earlier the local manufacturer use to keep there prices near to the landed prices of imported newsprint. At that time 3% or 5% had a lot of value, but now the newsprint of domestic manufacturer has been sold at least 10 to 15% lower than the landed value of the imported newsprint. So when it is sold 10% less than, 3% doesn’t make much a difference. Secondly, dollar and rupee exchange rate is now around 50 rupees, so the elimination of duty though will help in reducing the cost of imported newsprint but foreign exchange parity will to some extent neutralize that effect. Altogether the domestic industry is the sufferer. We are giving frequent representations to the Government to give us equal concession on the custom duty on the inputs which we import especially waste paper. This benefit will go ultimately to the customer because if our costing comes down, then we will sell at lower price to the publishers. While presenting the interim budget Mr. Pranab Mukherjee stated that he would not like to make any major change in the structure only the new government will do that. But we are seeking the second half of what he has done, right now he has done first half by reducing duty on the finished good, so by the same analogy we are seeking duty exemption on waste paper.

Pramod AgarwalMr. Pramod Agarwal,

Managing Director,

Rama Papers Ltd.

Earlier the duty was 5% which was reduced by 2% and now the rest 3% has also been removed. This will lead to increase in the unfair practice of importing other grades of paper under the name of newsprint and then sell it to the market. This unfair practice will affect the Indian manufacturers & the market. Duty cut on newsprint was not required at this point of time as the prices of newsprint have come down tremendously. Recently we had reduced the newsprint prices by Rs. 5,000-7,000 per ton. The leading newspapers hesitate while using Indian newsprint and they import it entirely. These big publishing houses has got phobia of using imported newsprint even if the similar quality newsprint is made available indigenously. This duty cut has been primarily meant for such few newspapers. Also if the duty has been removed from the finished paper then the same way it should be removed on the raw-material particularly waste paper which we are demanding from the government.

J K GuptaMr. J K Gupta,

Chairman,

Kalptaru Papers Ltd.

This step will affect the Indian paper industry a lot, which is already in trouble especially the newsprint industry because production has been increased a lot much more than the required demand. There is a little mistake of our industry too as when there was scarcity of newsprint they inflated the prices a lot. The profitability should have been kept to a certain level but few mills tried to take the benefit of short supply and increased the prices above bearable levels. The newsprint price which was Rs. 28,000-30,000 per ton was taken to the level of Rs. 35,000- 38,000 per ton, in spite of the fact that there was no hike in the raw material costs. This activity forced the publishers to boycott leading Indian newsprint manufacturers and imported their entire requirement. Thus the import increased a lot and during last quarter 40% more newsprint was imported. Moreover the duty cut has been done due to elections to please the print media.

PN TailorMr. P.N. Tailor,

President, Pragati Papers Inds. Ltd.

It is a welcome step of the government for elimination of custom duty on imported newsprint paper as well as reduction in 4% in excise duty on writing/printing paper in the month of January, 2009. We suggest that the similar custom duty relief should be granted by the government on the import of waste paper that will help the paper industry to become more competitive in the present recessionary condition. The government should also come forward in granting the other stimulus package to paper industry, such as making legal obligation more flexible and easier providing the financial assistance at low rate of interest.

Presently the custom duty on imported raw material is being charged on minimum price of 125US$ per tone irrespective the actual purchase price is less than the said fixed price i.e. ranging between 65 to 100 US$ presently. In Mumbai Custom duty is charged on 90 US$ per tone basis, whereas in Delhi it is charged on 125 US$ per tone basis in case of actual purchase price is less than the minimum fixed price. It is suggested that the matter should be taken up at appropriate level for charging of custom duty on imported waste paper on actual purchase price.

Mr. N.K. Pasari,

Managing Director,

Shree Krishna Paper Mills & Industries Ltd.

Earlier duty on newsprint was5%which was reduced to3%and now to 0%. The impact of this duty will be around 80 paise to 1 rupee depending upon the prices quoted by the international dealer. The present prices are varying from 530$ to 600$. So the total impact is around a rupee. The imported newsprint landed cost will be around Rs. 26500-27000 per ton, and then no Indian manufacturer can sell above this price. If the imported papers will come at lower price then every consumer will use it. The duty cut is entirely meant for media and has been done to oblige them during the election. We are demanding from the government that 5% duty on waste paper, we import, should be eliminated. Virtually the newsprint manufacturer is the sufferer because they are not able to run even 60% of their capacity.

Mr. Mahendra Shah,

Shah Pulp & Paper Mills Ltd.

It is a sheer injustice and will lead to further weakening of the local paper Industry which is facing problem of heavy imports due to decreasing trend of imported newsprint prices in the International market. It is a diehard situation for us. Might be the Indian newsprint will be destroyed and demolished, if duty is not removed on imported waste paper. Government should give duty cut on raw materials and subsequently support paper industry especially small industry and reinforced the efforts.

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