FTA with SE Asia will impact our profit margins: Paper industry

JULY-2014 – The free trade agreement (FTA) plan with the Southeast Asian countries is bound to create problems for the domestic pulp and paper industry. The FTA has increased duty-free import of paper from Malaysia, Indonesia and Thailand, impacting domestic players. Kasi Viswanathan, MD, Seshasayee Paper & Boards. Kasi Viswanathan, MD, Seshasayee Paper & Boards. Kasi Viswanathan, MD, Seshasayee Paper & Boards, said, “The input costs for the domestic paper industry has gone up along with the increase in the wood prices by 90%. This has created a pressure on the profit margins of paper companyies, ‘’ he said, on the sidelines of the 8th PaperTech 2014 summit organised by the CII. “We are asking the government to have a relook into the FTA, which has made a major impact on the Indian industry. We have also made a representation to the government about the increasing imports levels, hoping for a positive outcome for the growth of industry,’’ he said without specifying the volume of imports. It is learnt that the 2.5% 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). Large paper manufacturers have resorted to import of costly pulp wood and the cost of production is also on the rise. “The wood prices have gone up by 90% in the last two years which has in fact increased paper prices in the last one year. There could be another increase as we are left with no options,’’ he said. The industry has raised paper prices by 15% in the current year. The domestic pulp and paper industry, with a turnover of Rs 40,000 crore, is struggling to cope with high input costs and chronic shortage of pulp wood. The industry is facing an acute shortage of domestic wood and has been forced to import wood for the past one year. At present, there is a duty of 5% on wood imported from non-Asean countries. The industry imported an estimated one million tonnes of wood in the past year. The landed cost of imported wood is about Rs 13,000 per tonne “We are seeking a level-playing field as the imported paper, especially copier paper, is cheaper by Rs. 2,000. This comes at a time when the industry is already facing challenges in terms of power, water and wood shortage,’’ he said. The industry was growing at a rate of 6-7% in the last few year but has seen a degrowth of 1% last year due to imports, he added.
Thursday, February 12, 2015
Paper News