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Capex in paper industry at a standstill due to cheaper imports: IPMA

Imports from ASEAN countries was up a staggering 67% in FY17; Chinese shipments were up 44%

Gireesh Babu  |  Chennai 

Capex in paper industry at a standstill due to cheaper imports: IPMA

in the country are finding it difficult to tap the growth potential, which is in tune with the Gross Domestic Product (GDP) growth, due to import of cheaper paper from countries, said Saurabh Bangur, president, (IPMA) and vice chairman of The industry in India has not been expanding capacity for the past 12 months or more, owing to this challenge.

"As per Directorate General of Commercial Intelligence and Statistics (DGCIS) data, imports from this region have risen at a CAGR of more than 40 per cent during the past three years. The month-on-month rise in imports has had a negative impact on the minds of Indian entrepreneurs and the paper trade," Bangur said.

The capacity of Indian mills had reached saturation point almost one and a half years ago, and is currently working at 100 per cent. Now, whatever growth happening in the sector in tandem with the growth rate, is being taken care of by the import.

"When there is a growth story and when there is a Make in India campaign, why can't Indian mills grow further and take benefit of it, rather than mills from outside coming into the local market," he asked.

The Indian market consumes around 13 million tonne of paper and another around three million tonne of newsprint. Paper production capacity, without taking newsprint into account, will be around 12 million tonnes, while the imports around 1.4 million tonne.

As per data, total import in FY17 was up 36 per cent over FY16. As far as imports are concerned, there was a surge of 67 per cent in FY17 numbers over FY16. Imports from China have increased by 44 per cent.

The Indian industry has been feeling the pinch during the past one and a half years. When the FTA came in and the duty was reduced to zero in 2015, from 2016 onwards, paper manufacturers from these countries started delivering products at prices that matched those of Indian manufacturers. Earlier these (ASEAN) manufacturers were exporting to Australia and the US, due to of which their capacity was utilised more to cater to the demand from these two markets. Later, Australia imposed anti-dumping duty on Indan paper and even US restricted entry. This prompted units in the region to look at other geograohies and India emerged as a favourable export destination, he said.

"We will be asking for a safeguard duty or some kind of non-tariff barriers. Both tariff and non-tariff barriers are needed," Bangur said.

The cost of wood is also lower in countries, at approximately 40 per tonne as compared to almost $110 in India. Around 5,00,000 tonnes of wood are imported every year at competitive rates and is also of better quality. This may increase further in the years to come, Bangur said.

First Published: Sat, August 19 2017. 21:03 IST
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