Budget Analysis: Printers decode the knots and crosses

Manoj Mehta, president of AIFMP
Sanjay Bhagwat of Mouj Cad
Chandresh Haria of Pragati Offset
Ajay Mardvikar
Bankim Mistry of Bharat Traders
Roy Alex of Newstech
Bhalchandra Atre
Hari Gupta of Chandana Graphics

According to you does this budget address any conditions pertaining to the print industry? If yes, which ones?

Manoj Mehta (MM): It has always been my contention that printing has not even been recognised as an industry by our government and so there is nothing positive about the whole budget as far as our printing industry is concerned. There have been voices raised in the country as far with excise being introduced on calendars, notebooks, exercise books and greeting cards. We at AIFMP, under my presidency are taking these matters seriously and taking it to the highest level possible. It is my strongest belief that we all must come together and be 'one' to accomplish these drawbacks which is today being faced by our industry.
Sanjay Bhagwat (SB): No. In the scheme of things, printing industry does not have any significant role in government priorities except for newspapers. I feel that budget will not have significant role in growth of any particular industry in future. In last few years one can see that budget has already lost its relevance at micro level. Print industry should not bother much about it.
Chandresh Haria (CH): The excise and the custom duty will affect the price of paper but in terms of benefit nothing specific to printing industry in this budget.
Ajay Mardvikar (AM): Almost nothing except excise duty burden on some items. However I think it will be reversed with due representation to appropriate authority.
Bankim Mistry (BM): Budget address is detrimental on printing industry, like central excise on labels, garments (including printed garments), branded goods (including printed articles like letter heads, visiting cards, identity cards,  envelopes); on stationery, catalogue, manuals, attendance cards, receipt books, vouchers, scratch pads, greeting cards and invitation cards. Apart from that, indirect impact due to additional 130 items under central excise and also due to more services (including hospitality and hospitalisation) under service tax, not removing of SAD on imports (SAD being in lieu of 4% purchase tax under MST, not applicable under VAT since 100% set off on purchases)
Roy Alex (RA): It does, especially for the newspaper segment in the industry.
Balchandra Atre (BA): There are no specific issues which address printing industry in particular in this budget. In fact there is no specific address for the issues raised in our pre-budget memorandum, submitted by AIFMP.
Hari Gupta (HG): The CVD (Counter Veiling Duty) exemption on cinematographic film will help the Indian film industry, which in turn will bring down the cost of production for the companies in print media and eventually for the printers. Besides this indirect effect, there isn’t much in the budget.


Multiple points of taxation continue to cause confusion. By when do you think the government will introduce the Goods and Services Tax(GST)? Will it be feasible?

MM: GST must be implemented keeping aside petty issues since industries and industrialists will benefit from GST and so will the state governments who are objecting to it.
SB: GST will be introduced in between 1 April 2012 to 31 March 2013. It is feasible,  provided state governments and central government work in tandem. In a democratic and federal structure, there is no point in pushing it or bulldozing it.
CH: We have been eagerly waiting for the implementation of GST since last two years. It’s getting delayed due to government machinery. From April 2013, as per the agreement with World Trade Organisation, it will have to get implemented. Till then, it’s a waiting game.
AM: Honestly not till 2014 Loksabha elections takes place. States ruled by  BJP and non UPA partners are dead against the present form of GST proposal. Yes! It will be feasible provided if implemented all over India at the same time and opposition is heard and their just demands are incorporated.
BM: Multiple point taxation is a modern method of indirect taxation; direct tax like income tax pinches while indirect tax is not realised due to sheer ignorance and camouflage. Modern method uses philosophy of taxing the actual user for service or product. This is nicely explained in all high school books on commerce that there are two types GST- CGST at central level and SGST at state level. There is a big problem of distribution of booty collected among present enumerable revenue joints.
RA: It is very feasible. The faster the better as far as it is clear on the tax percentages ie industrial capital equipment plus consumables and consumers capital goods and consumables. At present there is a lot of ambiguity with MH VAT on this issue. The same would go for service tax, where again there are many percentages causing confusion and left to the interpretation of the authorities leading to red tapeism and corruption.
BA: There are still some areas of difference of opinions between the state and centre, if states cooperate, GST can be introduced during this year also. Latest should be next budget.  At least centre can start with central GST and then the states can follow. (However, abolition of octroi in Maharashtra is still a big issue in spite of 1% increase in base rate of 4% last year) As per the act, octroi should not be charged the same as subsumed in VAT. Hope with the introduction of GST this issue will be addressed. I do agree that multiple points of taxation cause confusion. GST implementation is being postponed due to political hindrances rather than any technical issue. GST as agreed by experts and industrialists is the most radical reform in indirect taxes, which if implemented in right earnest, will take Indian economy to scale new heights. The best supporting example for this is introduction of VAT in 2005. For all states, revenue on this count has grown manifold, with least of efforts. In fact due to introduction of GST, commodities will become cheaper, as has been widely discussed by various experts and published in newspapers such as Economic Times during last two to three years.
HG: The rollout of GST is on the cards as the following progress has been made:
(1). Standard rate of Service Tax retained at 10%, while seeking a closer fit between present regime     and its GST successor.
(2). Areas of divergence with states narrowed down.
(3). As a step towards roll out of GST, proposed Constitution Amendment Bill to be introduced in this       session of Parliament
(4). Under Mission mode projects, funds released to 31 projects received from states / union territories for computerisation of commercial taxes. This will allow states to align with roll out of GST
(5).Significant progress in establishing GST Network (GSTN), which will serve as IT infrastructure for     introduction of GST.


The budget has allocated funding for social sector spending programmes like Sarva Siksha Abhiyan which has an outlay of Rs 21,000-cr. How can the print industry ensure that this will have proper delivery systems and that the money is being utilised to produce books?

MM: Well, an interesting question to speak but then do you really think we have any teeth to go against the delivery system which today is not even in the 'complete' control of the government with the PDS still having loopholes unplugged! I also would like to add that we should all come together in order to fight these evils and find a solution to these problems which in fact affects each one of us in the print industry.
SB: Print industry is not in a position to ensure proper delivery system. Most of the leakages happen with the help of publishers who produce a trash quality of books. So money is used to produce books but remains of no value to students.
CH: This programme needs more transparency. Plus, some fixed quota of printing should get passed on to the small and medium size printers, who are not getting any benefit from such spending programmes.
AM: Indian print industry is competent enough to handle all sorts of challenges including heavy demand. Now to convert social sector spending in producing books, certain factors should be kept in mind:  
First, printers should come under one apex body on state level and use the united strength to put pressure on respective state governments to generate the requirement of books and other printed items. Second, printing clusters should be formed at district levels and be further taken to small towns. Third, RTI Act to be effectively used to find out how the allotted money is being spent by state government. Lastly, the experts from education and other social sector should be contacted to find out what kind of printed information is needed for the overall growth of the urban as well as rural citizens.
BM: With the efficiency of administration of such funds being very poor, to reduce pilferage and illicit siphoning of such noble funds, our government should use internet for mandatory and stipulated education books, rather than continuing with present inefficient printed books system with its inherent corruption. I have suggested to authorities during frequent non availability of such books even after months of school opening that all students should have a provision of downloading and printing of their required material at their wish and requirements, at least in urban area.
RA: I don’t think our industry can ensure anything under this scheme. Out of the planned layout I don’t think production of books would get even 1%! The distribution under any scheme is always subject to a lot of loop holes and diversions!
BA: Sarva Shiksha Abhiyan, having an outlay of Rs 21,000-crore, printers can definitely benefit. Entire fund is not available for printing of books, as per budget details. I think, we will have to start a dialogue with the concerned department for this on Maharashtra Mudran Parishad platform, along with our issue of textbook bureau.
 

The newspaper sector has ensured lesser taxation for mailroom systems. Shouldn't the print    industry have a strategy for sectors like commercial, packaging and book printing and conduct an ongoing dialogue with the government?

MM: "Togetherness" will give us strength to fight many evils, if not all.
SB: Newspaper sector has been getting the benefits of taxation for last 50-60 years. It is because of the ministry clout that they have. Print industry does not have power to influence government policies because of the scale of operation and the mindset.
CH: Yes we should get united on this front. If newspapers can do it, so can the entire print industry.
AM: In my opinion this is the need of the hour. Unless the issues are not raised from time to time the authorities will conveniently forget the print industry.
BM: In a democracy there should be no provision for favoritism. Newspapers have been enjoying several tax benefits at the stake of the poor citizens of India. Almost all newspapers are either means of exploitation or mere business houses. They are no more social means of freedom, of profound propagation, of elucidating vocabulary. They are more interested in multi-colour advertisements of flash exposure for promotion of useless imported white goods and cinema. As such, I find no sympathy for such publication business.
RA: The newspaper and publishing sector are opinion makers and movers important to the "powers that are", unlike the rest of the printing industry.
BA: On this aspect our AIFMP is constantly in touch with the government for various issues. They are submitting PBMS. However in this budget our demands do not seem to have met. Here we need to strengthen the hands of AIFMP.
HG: Our industry is growing at a rapid pace and implication of various kinds of taxes is dampening this growth. In order to safe guard the interest of print sector, there should be a forum whereby the changes that effect our industry as a whole should be put forth to the government.


There seems to be tension about the impact of the print on the environment. How will the print industry deal with this?

MM: Environmental effects are certainly there – I do not deny but then so is the case with each industry and I do not think the authorities will be taking all vehicles off the road to avoid sound, noise and air pollution. What I intend to say is that if print has environmental affects then there are solutions to be found and are already available too. Growth rates are there to stay in the Indian economy and same applies to the growth of print.
SB: I don’t think print industry as such have adverse impact on the environment. Paper industry will have to address these concerns more effectively in future.
CH: Printers should adopt the green printing concept by getting FSC certified and contribute their share as social responsibility. Today variety of FSC certified consumables like paper and ink are available in market.
AM: I think it is hyped too much that print industry is drastically affecting the environment. At the same time every printer should start taking corrective steps of his own and should not wait for the laws to come into force. Lot of information and suggestions are freely available on net and print industry magazines. Remember "slow and steady wins the race".
BM:  Environment is a tool used by white skinned to monopolise business in their favour. Each and every technology used by printing fraternity universally is promoted by them. Indigenous system of any country is dwarfed and has never commercialised anywhere. Why only paper, also refer printed textile, printed plastics, the modus operandi is the same.
RA: I am not aware of any tension with regard to the impact of print on the environment except on the flexible packaging industry, which is growing by "leaps and bounds".
BA: Though this is true, print industry cannot do much. Because the spread of education in developing countries, requirement of paper for packaging in large quantities due to overall economic growth, paper requirement is always going to be high. Use of alternate materials like recycled paper are some solutions, which have no immediate answers.


As proposed in 2011-12 budget, calendars, letterheads, greeting cards and some other printing products will be covered in excise exemption. MMS has already represented to the CBEC whether these products will be eligible for it, we would like to know your views.

MM: MMS has always been a front runner in activities related to the benefits of the printer and I am sure it will be taking such steps in future also.
CH: Eventually once GST comes into picture, all kind of products will get covered under uniform platform. I cannot say whether it’s early or not eligible. Small printers still have an advantage with their turnover limits, but for those who are paying it have no mod-vat or advantage of it and the cost of overall product going up. If you look at the above items, these are all end user products and people might not hesitate to pay this 1% extra on cost.
AM: I am optimistic. It will remain exempted and this initiative taken by MMS is absolutely correct.
BM: There would be no relaxation offered because of various factors: Some still available being under SSI exemption, applicable being under branded item, such inclusion being in prosperity of forthcoming GST, being poorly (but democratically) represented by print industry. I suggest not to resort to non democratic means of representation and relaxation.
RA: I do not think this will have a real effect as the "aam aadmi" generally do not consume such materials.
BA: Inclusion of certain items, as mentioned by you, was always on cards, when the deliberations on GST began. This seems to be an exercise towards implementation of GST, where in all items, hitherto exempted, having NIL rate of duty will be brought into tax net, barring some essential commodities. Tax implications on the printing items, newly covered in this budget are minimal. SSI exemptions will be available for these. A detailed write up (note on changes in Union Budget 2011-12 relating to central excise) as very nicely and thoroughly prepared by Venkatraman is circulated by AIFMP via e-mails.
HG: Certainly, levy of new taxes on any products will hinder the growth. The levy of excise on these products would increase prices and in turn affect the profit margins.

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Union Budget 2011 at a glance for Indian Print Industry