The domestic paper industry, which is struggling to cope with high input costs and chronic shortage of pulp wood, will face a new challenge in 2014 — duty free import of paper from South-East Asian nations.India’s 2.5 per cent duty on paper imports has come down to zero on January 1 as per the terms of the free trade agreement it has with the Association of Southeast Asian Nations (ASEAN). The duty waiver by itself is not a concern, but in the context of the weakening competitiveness of paper mills, imports will aggravate the situation, say industry representatives.
Senior executives at large paper mills under the Indian Paper Manufacturers Association said the depreciation in the rupee has so far been a barrier against imports. But with the prevailing pulp wood shortage, large paper manufacturers have resorted to import costly pulp wood and the cost of production is on the rise. The industry has raised paper prices by 10-15 per cent in the current year. This is creating space for imports.
Pulp wood prices are up by 70-80 per cent in the last couple of years to about Rs 10,000 a tonne. Paper mills are importing pulp wood even if it is costlier by 30-40 per cent as domestic stocks are not available.
With imports of cream wove and maplitho paper set to pick up, the note book segment could be hit.
At about $780 a tonne cost and freight for stocks from South Korea, the landed cost is about Rs 48,000 a tonne against the domestic price of Rs 52,000.
Coated paper, copier paper and specialised products are also expected to flow in. India imports 8-9 lakh tonnes of these varieties annually. Import orders are on the increase, said a leading dealer.
Annual consumption of coated paper is estimated at about 6.4 lakh tonnes with 40 per cent – about 2.7 lakh tonnes – met through imports from China. The new sources could be Indonesia and South Korea in the coming years because of the cost advantage.
The two largest domestic suppliers of coated paper are Ballarpur Industries Ltd and JK Paper Ltd. Though coated paper prices in the domestic market are benchmarked against international prices, the threat of easier imports will reduce the flexibility for these mills, said an industry source.
The challenge for the imports will be setting up a distribution channel and competing against well-entrenched domestic players.
Branded copier paper demand is about 5.5 lakh tonnes and imports are restricted to some niche, high grammage varieties totalling about 5,000 tonnes. However, an importer pointed out that copier paper demand is growing in the double digits annually. Further growth in demand will have to come from imports.
Source:- thehindubusinessline.com
No comments:
Post a Comment