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Budget Unravelled: Anand Limaye talks to print leaders in India

13 April 2010

PrintWeek India, April 13 - Anand Limaye, editor of Print Bulletin and mentor to the Mumbai Mudrak Sangh as well as Maharashtra Mudran Parishad; interacts with top printers in the country in order to understand the impact of the Budget 2010

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P ChanderPresident, All India Federation of Master Printers
Shreyas PandyaFormer President, Gujarat Chamber of Commerce and Industry
Vinod JainChairman government relations, All India Federation of Master Printers
C R JanardhanaPast president, All India Federation of Master Printers

Ranjan KuthariManaging director, Antarctica, Kolkata
Kamal ChopraGeneral secretary, North India Printers’ Association

 


 
Anand Limaye: As a printer, are you happy with the Budget? Especially, the continuation of reforms and high single digit growth?

P Chander: We are not happy with the budget. The AIFMP had submitted our pre-budget memorandum to the finance department. We feel they have not conceded to our main issues. We feel reforms are necessary. This includes: opening of the economy, announcing attractive schemes, liberal credit facilities. We feel the single digit is poised for a double digit growth in the near future.

Shreyas Pandya: Yes, quite happy.

Vinod Jain: This was a well balanced budget, which should go a long way in boosting the Indian economy. For the printers, the central excise duty has been reduced to 4% in Chapter 4819.10 (cartons, boxes and cases, of corrugated paper or paper board). Subsequent to the budget, we were informed that some divisions of the Chennai Commissionerate of Excise are causing confusion due to their interpretation. For instance, the reduced rate of 4% duty will be available only to units that manufacture corrugated cartons or boxes wholly from start to finish within their factory, without outsourcing any process or operation to outside job workers. Otherwise the increased 10% duty will applied in order to support this contention. The officials also cited the description in the Explanatory Memorandum to the Finance Bill which reads "Corrugated boxes or cartons manufactured by stand-alone manufacturers." The AIFMP took up the matter with the Finance Ministry. We met the senior officials on 22 March, 2010. We have been successful in explaining our point of view and convincing the authorities. The Finance Ministry should issue a necessary clarification and notification about the matter.

C R Janardhana: The single digit growth is not adequate for India. There should be higher growth.

Ranjan Kuthari: The budget is positive. It is expected to bolster the GDP. Plus it supports the manufacturing industry. With the growth of the manufacturing industry, the printing and packaging industry will grow. Of course the lobbying power of printing industry is weak. It is weaker than the corrugated box manufacturing industry. For the last five-six years, the cardboard box manufacturers have been able to achieve their goals. This year the excise duty on corrugated box has come down from 8% to 4% whereas excise duty on printed products has risen from 8% to 10%.

Kamal Chopra: I am happy not merely as a printer, but also as an Indian. I am happy that there are constant reforms. Also the initial steps undertaken by Dr Manmohan Singh during the nineties has started paying dividends. We can notice the wealth in the market. This is due to the economic reforms initiated by Dr Manmohan Singh's liberalisation during the early nineties.


Anand Limaye: There are key concerns about fiscal deficit, inflation growth and a rise in petrol prices, aluminum prices etc? Will this increase the price of print in 2010? Your comment?

P Chander: The fiscal deficit is widening - and it has to be reduced in the years to come. We feel the growth in inflation is linked to the soaring fuel prices. The rise of petrol and diesel prices will increase the transport rates - and therefore our raw material supply rates will increase, if there is a rise in solvents too. In addition, there will be an impact on our pressroom chemicals; plus with the rise in aluminium prices increasing steadily in the international LME market, the plate prices will increase.

Shreyas Pandya: Yes, there will be an increase due to the rise in paper prices.

Vinod Jain: Yes, rise in petrol prices shall have an impact on the price of print.

C R Janardhana: The fiscal deficit, inflation at a high level, raise in petrol prices and increase in aluminium price which is an important print input will give rise to print price increase. I feel this will have a cascading effect. When the printers are facing stiff competition from foreign countries in the global market, this adds insult to the injury for the printers in India, particularly those who are exporting on a regular basis.

Ranjan Kuthari: Negative aspect of the budget is increase in the price of petrol and diesel which will increase the cost of finished products. Fiscal deficit means availability of funds and devaluation of currency.

Kamal Chopra: Yes, not only the petrol and aluminium prices, but the prices of major raw materials like paper and paperboard are going to increase. This will have an impact on the print cost. Moreover, the shortage of skilled and semi-skilled labour and the opening of FDI in printing and packaging sector are going to put the printer under pressure in the next quarter.
 

Anand Limaye: There have been some benefits in the duty structure for paper. But do you think the paper companies will pass on the benefits to the printer? Also any modifications in the tax structure which may affect the medium and small printer?

P Chander: The paper mills will never have the courage to pass on the benefits to us. They can desist from increasing the prices. However, if they don't desist, then what action do you suggest that our printers' association should adopt. Perhaps we should host a periodical meeting with them and maintain an open line of communication.

Shreyas Pandya: Paper companies never pass such benefits to the printers. The only exception to the rule is, when there is reduced demand in the market. It is difficult - well neigh impossible - to force any action on the paper miller owners in the present free economy structure. The only option is, to balance it to import with lesser duty.

Vinod Jain: As far as I understand, no benefit has been given in the duty structure for paper. Even if it was done, the paper manufacturers would not pass the benefits to the printers, as has been their practice in the past. As a matter of fact, for no rhyme or reason, there has been a sharp increase in prices of paper and paperboard after the announcement of the Budget, which needs to be immediately addressed. I am confident that the chairman of paper, paperboard and other raw materials would do all that is required to counter the unjust offensive by the paper manufacturers.

C R Janardhana: Any decrease in the paper cost constituent is not being passed on to printers by the paper dealers. This is the fate of printers in India.

Ranjan Kuthari: No paper company will ever pass on any benefit by virtue of revision in the duty structure. In the history of the print industry, only once has the reduction of duty been passed on to the printing industry.This was during a huge recession. AIFMP should take up the issues of (a) huge increase in the price of duplex board and kraft papers - 25% to 30% + (b) To allow imports of paperboard duty free, this is vis-à-vis printed books which are being allowed duty free, (c) imports under SAPTA and bi-lateral agreements with neighbouring countries which allow imports of printed materials including packaging materials at a concessional rate of customs duty - even up to zero%. My point is, this has to be neutralised.

Kamal Chopra: It is seen that such benefits are never passed to the print industry. On the contrary we encounter a sharp increase in the prices of paper and paperboard especially with kraft paper and duplex board. The prices of such paper has increased by 20 to 23% in a couple of months. There must be uniform tax structure. Perhaps implementation of GST will bring uniformity next year. If no, then what action do you suggest that our printers' association should adopt under the banner of AIFMP? The printers of India under the banner of AIFMP can do wonders. Paper is considered to be an essential commodity under the Essential Commodities Act - 1955. And yet we rarely have access to it. It is also come to AIFMP's notice that small mills do not indicate specifications or prices on the wrappers of the bundles of paper and paperboard. The AIFMP can persuade the Indian Paper Manufacturers Association to regulate the prices or at least supply pre-information about price increase. AIFMP can be vigilant about unnecessary price hikes.
 

Anand Limaye: The increase in budgetary allocations for school education and the special grant from the centre for elementary education are very positive signs for the sector. What impact will it have on educational book production?

P Chander: This is welcome. We feel, once literacy rates will increase, the notebook and textbook production will increase. The state government printers across the country will procure good printing orders. The education cess for secondary and higher education cess on income tax remains the same.

Shreyas Pandya: Very positive impact. Printers must keep an eye on this sector.

Vinod Jain: The increase in budgetary allocations for school education and the special grant from the centre for elementary education is a very positive sign for the sector. I feel it will continue to have a positive impact on educational book production.

C R Janardhana: India has to give importance to literacy; and this should start from primary education. Any budgetary allocation for elementary education is a welcome sign. This will promote education and uplift the poorest of the poor in ths country.

Ranjan Kuthari: Definitely higher allocation for education is a very welcome aspect for the print industry.

Kamal Chopra: There are two aspects to this. One: we have to face stiff competition from the electronic publications. It is seen that many universities and educational boards are going online. In fact they have stopped the publication of prospectus and application forms etc. The production of children books in India has suffered and many children book publishers have stopped or lowered their production. Coping with this demand, some leading book publishers have started e-publishing. Secondly: due to the growth of education in India, print media is growing. According to the 2001 census report, literacy in India has reached 66%. This growth in literacy together with rising educational levels and rapidly progressing trade and industry in India is a good thing. Literacy rates is growing; increase in the literacy rate has direct positive effect on the rise of the publication of books, circulation of regional newspapers. The people are first educated in their mother tongue as per their state in which they live. For example, students in Maharashtra are taught Marathi. This means they are educated in their state language and the first thing a literate person does is read newspapers and gain knowledge. Therefore higher the literacy rate in a state, the sales of the regional newpapers in that state rises. There's little doubt about India's market potential in print media. According to a national survey, 248 million literate adults don't read any publication. But readership of newspapers and magazines is up by 15% since 1998 to 180 million. With the growth in literacy, the Indian print media industry is expected to grow The print industry is projected to grow at a CAGR of 9 per cent in the next five years and will reach Rs 269 billion by 2014.


Anand Limaye: On which issues do you think the print industry should make a united presentation to the Finance Ministry prior to the Budget session?

P Chander: Zero% import duty on coated paper and uncoated paper. Also zero% import duty on four-colour machines.

Shreyas Pandya: Clarification on ambiguities of excise duty structure for items like cartons and labels, register etc are specially covered in Chapter 8 but printers carrying out such items should be dealt with Chapter 49 only.

Vinod Jain: We have already sent our Post Budget Memorandum 2010-11 to the Finance Ministry and all other concerned ministries. Also, we have sought their attention about our long outstanding demands. We have met senior bureaucrats in the Finance Ministry and have apprised them about the matter.

C R Janardhana: This question is not an opportune one at this juncture. Now that the budget is over and it is under implementation. We don't think it is so easily alterable. However before the next budget session sets in, we have to be prepared. We should be ready with the issues relevant to the printers - and place them in front of the Finance Minister before the pre-budget session.

Ranjan Kuthari: Budget session has concluded - and whatever points above should be taken up immediately for the next year.

Kamal Chopra: In the coming years, we may face a boom in outsourced jobs from the Europe and I do feel that the industry is not fully prepared. We may ask for reduction of import duty especially on machines not manufactured in India. They have reduced the excise duty on cartons, boxes and cases made of corrugated paper. However, they have raised the excise duty on the boxes made of non corrugated paper, we may request the Finance Minister for the same (4%) excise duty on all the paper and paperboard products such as boxes, labels and tags, diaries, account books, registers etc.

 
Anand Limaye: Can our industry form a strong lobby like paper manufacturers and newspaper association?

P Chander: We have a good strong lobby. But we have to enhance it further as there is always shuffling among bureaucrats in the Finance Ministry. We should realise it's an ongoing process. And the AIFMP secretariat should gear up for this.

Shreyas Pandya: Not in the present circumstances.

Vinod Jain: There is no reason why we cannot form a strong lobby like the paper manufacturers and the newspaper associations. To achieve this, the entire printing fraternity would have to talk in one voice with the main goal of giving a major fillip to the printing industry and ensuring that it takes a giant leap forward.

C R Janardhana: The obvious answer for this question is yes. The case of China, Japan is a clear indication that the printers should join hands and have a synergised approach which tells the world that 1+1=3 rather than 2.

Ranjan Kuthari: Strength of lobbying depends on the strength to influence. Hence we can never be as strong as the paper industry.

Kamal Chopra: Jointly, we can conquer anything. Today, printing and packaging is the second largest industry of the world. No one can live without printing and the AIFMP which is an apex body of such a industry must be strong. We have seen that other leading industry associations are professionally managed and that is why they are able to lobby with the government, political parties and other sectors. The only requirement is unity and a genuine spirit of working towards the benefit of our industry.

 
Anand Limaye: Can we set up a Print Advisory Group (PAG) under the stewardship of key printers in the country, who will expedite discussions with the Government on a regular basis?

P Chander: We can welcome such a move. As you know, we have a development council for printing which operates under the Government of India. But it has its own limitations due to infrequent meetings. The PAG should be started without any delay. It is a great suggestion.

Shreyas Pandya: Yes, to start a PAG is a very good idea. Long over-due ....

Vinod Jain: As it is, we are holding frequent meetings with the senior Government officials in the different ministries and a number of issues have been resolved due to our efforts. The notification with regards to the new development council for the printing industry is expected to be announced in April 2010. But the onus is on the AIFMP to ensure regular meetings of the development council are held. This is the only way to create an interest group that puts pressures on the Government officials to examine the problems of the printing industry; and which issues need to be addressed on a priority basis. I am confident that regular meetings of the development council and our continued interaction with the Government officials would solve most of the problems of the printing industry.

C R Janardhana: Yes, mass representation is a theory which has been adopted right from the Gandhian days. This bears fruits. "United we stand and divided we fall" says the adage. I think the AIFMP should take take the lead. If there is a concerted effort, a lot more can be done for the printing sector - and improve its conditions.

Ranjan Kuthari: Setting up of PAG will not work. Point is that we should strengthen participation in development councils of printing, paper, tax reforms, etc. I think we should utilise these forums fully for redressal of our grievances.

Kamal Chopra: I feel, first of all there is a need for the professional management. Formation of a PAG with key printers who have access to the political and government lobby centres is not a bad idea, but such a group must work for the benefit of the masses rather than concentrating on the benefits of the top players.


If you've any feedback about the above discussion or the future of the print industry, please eMail to samir@haymarket.co.in

 

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