Paper companies face margin pressure

Rising imports are putting pressure on local paper manufacturers.

The 10 per cent price difference between imported products, mainly Chinese, and the locally produced ones, are hitting companies in a big way. Imports of papers and paperboards have increased nearly 40 per cent during the first three quarters of the current financial year.

Imports of papers and paperboards hit 1.47 million tonnes during April-December 2017-18 from 1.05 million tonnes a year ago and 1.42 million tonnes in 2016-17.

During April-December, imports of papers and paperboards from ASEAN and South Korea, with whom India has Free Trade Agreements (FTAs) and no import duty is levied, have grown 73 per cent and 83 per cent, respectively, over a year ago. Imports from China have grown 53 per cent over the same period.

While India imports mainly uncoated writing and printing paper from ASEAN, large volumes of coated paper are being imported from South Korea and China as well.

Imports of papers and paperboard grown at a compounded annual growth rate (CAGR) of 18 per cent during 2010-11 to 2016-17.

The cost of producing paper in India is much higher than in competing countries due to the high cost of raw material and other inputs, as well as energy costs.

While India is one of the fastest growing markets for paper manufacturing in the world, the growth is increasingly being taken over by imports. Lack of raw material and high energy costs are affecting domestic manufacturers. Foreign manufacturers have easy access to captive plantations and cheap energy in their respective countries and enjoy nil import tariffs while exporting to India under different FTAs, said Saurabh Bangur, president, Indian Paper Manufacturers Association (IPMA).

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