Export Business

The Indian paper industry was one of the few sectors that remained immune to the adverse effects of the global economic downturn during the last financial year. Despite the economic uncertainties, small-scale paper manufacturers in the country continued to sail smoothly and register steady profits due to buoyant demand, firm paper prices and the absence of lower-priced imports.

However, the domestic paper industry is currently going through tough times. The increased dumping of cheaper imports and the sluggish demand for paper in the global markets is making it difficult for small-scale paper manufacturing units to maintain their margins and meet the high production costs.

Sops sought to stop dumping

The huge influx of coated and un-coated wood-free grades of paper into the Indian market is adversely affecting the domestic paper sector. Amid the challenging market conditions and the surge in low-priced imports, small-scale paper units are unable to increase their prices due to the fear of losing their competitiveness and customers.

'The domestic Paper Manufacturers are becoming increasingly vulnerable as cheaper paper products are being dumped in India by neighbouring countries like China and Indonesia. It has put tremendous pressure on paper prices, including those of the coated paper and photocopier paper categories, which were once doing very well in the domestic market,' said G Singh, Director of Hemkunt Paper Mills, a mid-sized paper mill in Ludhiana.

Hence, small paper manufacturers in the country are seeking the imposition of a safeguard duty on imports to shield them from lower-priced imports.

Industry associations like the Indian Paper Manufacturers Association (IPMA) have also called for a reduction in customs duty on inputs like pulp and coal and uniformity in Duty Entitlement Pass Book (DEPB) rates.

'The government needs to levy a safeguard duty on imports and disband the multiple tax system to enhance the competitiveness of small-scale paper manufacturers,' said M Enose, Senior Sales Manager at Amala Paper Industries, a small-sized company based in Ernakulum.

Besides taking measures to restrict the entry of cheaper paper imports, the government should initiate schemes and allot funds for education promotion in the country. This is likely to boost the domestic demand for paper, and subsequently encourage the paper manufacturers in the country to embark on capacity expansion projects and invest in enhancement of their operational efficiencies.

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David Parks is a well known author and has written articles on IT Companies Directory, B2B Portal, Trade Leads, suppliers, Manufactures and many other subjects.