 "Cheap paper import hurts domestic manufacturers")
Import of paper and paperboards (excluding newsprint) has increased with a compounded annual growth rate (CAGR) of 21 per cent in the last three years from 1.79 million tonnes (mt) in 2010-11 to 2.25 million tonnes in 2013-14. During the first half of the current financial year, its import has already overshot the 50 per cent mark to 1.17 mt. This has a major impact on domestic paper producers.
The domestic demand of paper rises in the second half due to educational institutes' preparations for printing of books and notes for the next academic year.
"There is substantial increase in import of paper and paperboards from Asean (Association of Southeast Asian Nations), South Korea and China. Imports to India will accelerate further in view of higher capacity creation in China (expected to cross 130 mt by 2016). Imports have been steadily increasing over the past few years hitting thereby, our own industry which has invested immensely on capacity creation," said Sanjay Singh, divisional chief executive of ITC's Paperboards and Speciality Papers Division.
ITC posted a five per cent decline in sales from its paper division at Rs 1,199 crore for the quarter ended December 2014, compared to Rs 1,257 crore in the corresponding period in 2013.
Domestic mills have reduced operating capacity, despite having a shortfall of 89 per cent of 12.75 mt of the installed capacity. With the government's growing emphasis on education, consumption is set to grow to 23.5 mt by 2024-25 from 13.10 mt now.
With rising imports, domestic production is set to remain lower thereby, widening the deficit. With mills' increased focus on long-term raw material security, the installed capacity is also projected to rise by 22 mt by 2024-25.
The domestic demand of paper rises in the second half due to educational institutes' preparations for printing of books and notes for the next academic year.
"There is substantial increase in import of paper and paperboards from Asean (Association of Southeast Asian Nations), South Korea and China. Imports to India will accelerate further in view of higher capacity creation in China (expected to cross 130 mt by 2016). Imports have been steadily increasing over the past few years hitting thereby, our own industry which has invested immensely on capacity creation," said Sanjay Singh, divisional chief executive of ITC's Paperboards and Speciality Papers Division.
ITC posted a five per cent decline in sales from its paper division at Rs 1,199 crore for the quarter ended December 2014, compared to Rs 1,257 crore in the corresponding period in 2013.
Domestic mills have reduced operating capacity, despite having a shortfall of 89 per cent of 12.75 mt of the installed capacity. With the government's growing emphasis on education, consumption is set to grow to 23.5 mt by 2024-25 from 13.10 mt now.
With rising imports, domestic production is set to remain lower thereby, widening the deficit. With mills' increased focus on long-term raw material security, the installed capacity is also projected to rise by 22 mt by 2024-25.
"India has been short on capacity for coated paper by 40-50 per cent. So importers have established capillary system right to the end-users' facility. Any fall in overseas prices immediately corresponds to domestic prices. This is the most affected sector by price fluctuations and forex fluctuations. Import of uncoated (copier and maplitho) paper has started on a large scale in port cities such as Chennai and Mumbai. Importers' distribution system, however, is not so strong all across the country. This is more of a price nuisance than volume nuisance. If they develop distribution channel across the country then impact would be much higher," said V Kumaraswamy, chief finance officer, JK Paper.
Meanwhile, basic customs duty on import of paper and paperboards works out to 10 per cent. But, import from Asean and free trade agreement countries is allowed without duty. The raw material, wood, has become costlier by several times due to its unavailability. Thus, imported paper works out more than 20 per cent cheaper in some cases.
"Indian paper industry is facing a double whammy. The government should immediately bring an enabling plantation policy in line with other countries. Also, allocate some degraded land either sole or on public-private partnership model for plantation, which will help improve environment and provide wood to paper mills," said Rohit Pandit, secretary-general, Indian Paper Manufacturers Association.
Meanwhile, basic customs duty on import of paper and paperboards works out to 10 per cent. But, import from Asean and free trade agreement countries is allowed without duty. The raw material, wood, has become costlier by several times due to its unavailability. Thus, imported paper works out more than 20 per cent cheaper in some cases.
"Indian paper industry is facing a double whammy. The government should immediately bring an enabling plantation policy in line with other countries. Also, allocate some degraded land either sole or on public-private partnership model for plantation, which will help improve environment and provide wood to paper mills," said Rohit Pandit, secretary-general, Indian Paper Manufacturers Association.