Anand Limaye: Anand Limaye: Paper mills are extracting undue advantage of the demand-supply situation
Anand Limaye, the chairman, legal cell of AIFMP and head at India Printing Works, in his detailed appeal examines why the demand for anti-dumping duty by the Indian paper mills is dangerous for the printing industry
The demand for anti-dumping duty by the Indian paper mills is unsubstantiated and ethically incorrect. Firstly, the petitioners have not described the technical specifications which can distinguish the copier paper to writing and printing paper, which are being sold as Creamwove and Maplitho. They have just specified the cut sizes. More importantly, the petitioners have not mentioned this category in the main plea. This means, it should have been in inverted commas, which is essential to be prescribed as 'Product Under Consideration' (PUC) required under the law.
The petitioners have challenged the presence of the AIFMP in this matter. I would like to clarify that we have all rights to attend and express our views as we have thousands of printer members not only from mofussil areas but even from urban areas. They regularly use this category of paper for their mini offset machines (popularly known as baby offset with masters for image carrying).
We strongly feel that the petitioners, by projecting copier paper, want to take "a backdoor entry" and cover the entire range of writing and printing paper, which also is being used by the printing fraternity on digital cut-sheet and sheetfed offset machines.
If the order is passed in its favour, we are afraid that it would be passed for the Tariff Code 4802 and then they would announce their game-plan with a logic like "all crows are black - it's black, hence it's crow" and the printing industry would come under their spell and suffer for three reasons.
One, it would become the monopoly of Indian paper manufacturers. Two, despite imports being allowed, they are raising the paper prices without any proper justification. Three, sufficient notice is never given to buyers who in turn suffer a lot in contractual business and tenders and finally, it’s because of the poor demand-supply ratio in the Indian market. We have proved that within a span of only nine months, from June 2016 to March 2017, the mills have taken undue advantage of the short supply situation of the market and increased the rates by 23.3%.
The short supply was due to the partial shutdown of two large paper mills. The Ballarpur unit suffered because of the company’s incorrect policy decisions to invest funds in SAGHA in Malaysia and TNPL on account of water shortage. Their turnover has plummeted for the above reasons and not due to the import of paper.
In the same period, several other mills have achieved par above excellence as far as production, sales and its profits are concerned.
The imports increased to fill in the gap of shortages created by the above reason by taking undue advantage of the situation.
The petitioners have no case at all. They have not filed this petition on genuine grounds but with the ulterior motive to take advantage of the demand-supply ratio. We have already filed a complaint before Competition Commission of India regarding unreasonable price rise and cartelisation.
Other disadvantages of anti-dumping
The Indian printer becomes non-economical as compared to import of finished goods in case of books, since books are duty-free. This will lead to increase in import of finished goods and the Indian printing industry will suffer.
This will also lead to loss of employment since the printing industry is highly labour intensive.
More bank NPAs (Non Performing Assets) as printing machines are very expensive and are bought on loan.
Import of paper keeps domestic players under check from hoarding, cartel formation etc, since there are only few paper mills in India and there is not enough competition.
Printers enter into long term contracts with their clients with long validity of rates. These contracts are entered into keeping view of current market rates since printing industry is highly competitive. An abrupt increase in raw material cost due to anti-dumping will lead to a direct loss to printers who cannot ask for any increase in rates as per contract terms from their clients. This will in turn dampen the industry morale.
The proposed solution
The raw material used to produce duty-free goods should also be made duty-free. For example, the paper used in printing of books should be imported duty-free or custom duty should be imposed on imported books.
In order to encourage the domestic industry, including paper mills, the duty on imported pulp (raw material) should be reduced so as to make them more competitive as compared to foreign paper mills or one must look into ways to make domestic pulp easily available.
Vinod Kumar Jain: ADD on paper will gravely impact printing, ink, plates as well as paper industry
Vinod Kumar Jain, managing director at Secure Print is also a member of the standing committee for government relations at the All India Federation of Master Printers (AIFMP).
In this blog, Jain takes on the protectionist strategy of the government and says the anti-dumping duty (ADD) on the import of paper, will further impact the already wobbling and teetering Indian print economy.
Under the General Exemption No165, commercial catalogues in book form, printed books and printed manuals in bound form or in loose leaf form are exempted from payment of customs duty. Moreover, vide the Bilateral Trade Agreements, printed materials can be imported at nil or much lower customs duty from various countries.
On the other hand, paper and paperboard, ink, etc. required as inputs for printed materials are chargeable to customs duty at the rate of 10%.
This inverted duty structure has increased plain and simple trading activities and a number of printed materials both educational and non-educational are being printed from outside the country and are being imported into India, thus depriving the printing industry, the ink industry, the plate industry as well as the paper industry in the country.
The import of printed materials during the year 2014-15 stood at Rs 2,769.27 crores, in spite of the fact that we have the finest printing units, who have won several international awards for excellence in printing.
Imposing of anti-dumping duty on coated and uncoated paper will have serious repercussions not only on the printing industry but also on the paper industry, the ink industry as well as the plate industry in the country.
On account of the internet explosion, the commercial printers are, as it is, fighting for their survival. Additionally, levying of anti-dumping duty would sound the death knell for a number of printers. This would also seriously affect the education sector as the prices of educational materials are bound to increase very sharply. Especially since paper accounts for 50% to 60% cost of books, etc.
There is no case whatsoever for imposing anti-dumping duty on both coated and uncoated paper.
In the case of uncoated paper, the petitioners are not even able to clarify as to how they had arrived at the import figures of the “product under consideration”, especially since no such classification exists for the said item under ITC HS Code. The data furnished along with their petition includes details of imports of coated paper.
The profitability, production, capacity utilisation of all units manufacturing the said uncoated paper has significantly gone up during the POI (Period Of Investigation). The decline in production is related to only Ballarpur Industries (BILT) which was on account of shut down of their unit for a considerable period during the period of investigation as well as Tamil Nadu Newsprint & Papers Limited (TNPL), where the production was affected on account of shortage of Cauvery water.
Imports, if at all, have taken place on account of shortage of production and the vacuum created as a result of the significantly lower production of BILT and not vice versa.