The surge in paper imports into India has raised significant concerns in the domestic paper industry, particularly as imports have increased by a remarkable 43% in the first half of FY24. Here’s a detailed analysis of this issue, drawing on data and information from various sources:
Volume and Value of Imports
- Overall Increase in Imports: In the first half of FY24, paper and paperboard imports into India grew to 959,000 tonnes, a substantial increase from 672,000 tonnes in the same period of FY23.
- Significant Growth from ASEAN Countries: A major contributing factor to this increase is the 257% growth in imports from ASEAN countries. Imports from ASEAN grew from 81,000 tonnes in H1 FY23 to 288,000 tonnes in H1 FY24. This growth is primarily due to the zero import duty on these products under the ASEAN-India free trade agreement.
- Value Terms: In terms of value, paper imports rose to Rs 6,481 crore in the first half of FY24, up from Rs 5,897 crore in the previous year. The imports from ASEAN more than doubled to Rs 1,509 crore from Rs 715 crore in the year-ago period.
Specific Concerns of the Indian Paper Industry
- Challenges in Competing: The Indian Paper Manufacturers Association (IPMA) highlighted the challenges faced by the domestic industry in producing paper and paperboard at competitive costs, especially considering the significant increase in raw material and input costs.
- Impact of Free Trade Agreements (FTAs): The preferential tariff treatment under various FTAs, such as those with ASEAN, South Korea, and under the Asia Pacific Trade Agreement (APTA), has put the Indian industry at a disadvantage. These agreements have led to zero or reduced import duty on paper, affecting the competitiveness of domestic producers.
- Operational Viability of Domestic Mills: The influx of duty-free imports is rendering many small and medium paper mills in India commercially unviable, contributing to revenue loss for the government and substantial foreign exchange outflow. Currently, out of over 900 paper mills in India, only 553 remain operational.
- Call for Government Action: The IPMA has urged the government to exclude paper and paperboard from preferential treatment in import tariffs and to review existing FTAs. It has also called for the imposition of suitable safeguard, anti-dumping, and countervailing duties on imports of various grades of paper, especially after recommendations by the Directorate General of Trade Remedies (DGTR).
- Quality Control Orders (QCOs): The issuance of QCOs for different grades of paper is suggested to ensure the supply of quality products to Indian consumers and to check the import of sub-standard products.
Future Outlook
- The imports are expected to accelerate due to the economic slowdown in China, trade restrictions, and import duties imposed by the US and the European Union to protect their domestic markets, along with new paperboard capacities coming up in Indonesia and China.
In conclusion, the significant increase in paper imports into India, particularly from ASEAN countries, has raised serious concerns for the domestic paper industry, prompting calls for government intervention and policy changes to protect and sustain the local industry.