Paper & paperboard imports surge 10% on nil customs duty after ASEAN FTA

Paper & paperboard imports have gone up nearly 10 per cent in 2019-20 to 1,637.3 tonnes from 1,478.2 tonnes. Over the last nine years, it has grown nearly 1,100 per cent. The share of paper imports from ASEAN in total paper imports for India has risen more than four times from about 5 per cent in 2010-11 to about 21 per cent in 2019-20.

Ever since ASEAN-India FTA came into force from January 2010 and basic customs duties were progressively reduced to nil in India, imports of paper & paperboard from ASEAN, especially writing & printing paper, have increased at a great pace.

"Domestic paper mills have been severely impacted due to imports flooding into the country from ASEAN countries at nil basic customs duty. Several smaller paper mills, and even a few large ones, have been forced to shut down their operations due to commercial unviability. There is adequate production capacity in the country which is currently under-utilised”, said A S Mehta, President, Indian Paper Manufacturers Association (IPMA).

He added, due to the Covid-19 pandemic situation since March, both inward and outward supply chains of the Paper Industry have been totally disrupted, and are yet to fully recover. There has also been a severe demand compression due to the lockdown, and closing down of educational institutes, commercial establishments, and downstream printers, publishers, converters, stationery services, etc.

ASEAN countries like Indonesia, which have significant domestic excess production capacity, are using this opportunity to push their excess inventories into India at very low prices at nil basic customs duty under AIFTA. This is further impacting the economic viability of many paper mills in India, already under stress, which will not only lead to revenue loss to the government, but also jeopardise the incomes and employment of thousands, especially in rural areas, including farmers who are engaged in agroforestry and supply wood to the Paper Industry, he alleged.

IPMA has been asking for an urgent review of the ASEAN-India Free Trade Agreement (AIFTA) for last several years in order to provide a level playing field to the domestic paper industry and has called for paper & paperboard to be placed in the Negative List of all existing and future free trade agreements (FTAs), including AIFTA.

Further, IPMA has stated import of paper & 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. That is, the import policy should be changed from ‘Free’ to ‘Restricted’. This would curb wrong practices being adopted in the market. IPMA has also asked for the basic customs duty on import of paper & paperboard to be increased to 25 per cent (WTO Bound Rate is 40 per cent).

IPMA also asked for the setting up of a Paper Import Monitoring System so that there is proper monitoring of imports coming into the country in terms of valuation, quality, classification, etc. This will help greatly in curbing unscrupulous practices, revenue loss to the Government, and benefit the end consumer. Import of Stocklot of all grades of paper & paperboard should be banned like done recently for coated paper, said IPMA.