Positive about the budget: AS Mehta of IPMA

AS Mehta, president and director, JK Paper as well as president of the Indian Paper Manufacturers Association (IPMA) is bullish about the budget. But he adds, the increase in the basic customs duty on recovered paper from nil to 2.5 percent has come as a dampener.

02 Feb 2022 | By Rahul Kumar

Mehta: The industry is passing through challenging times and is hard pressed for raw materials

AS Mehta said, "The Union Budget 2022-23 is a growth oriented one with a significant increase in capital expenditure to Rs 7.50 lakh crore". Mehta felt this will revive the investment cycle and create employment. He said, "It is clear that the Government wants to sustain and stimulate the economic recovery process." He added, "The FM has outlined several positive signals for the manufacturing sector which augur well for the paper industry."

Mehta welcomed the statement of the FM that policies and required legislative changes to promote agro forestry and private forestry will be brought in. He said, "Despite the tremendous efforts of the paper industry in promoting plantations in the country, availability of wood domestically is inadequate compared to the demand of India’s paper industry."

He pointed to the pioneering work that has been carried out by the paper industry over the last three decades in promoting agro / farm forestry in the country. He said, "In India, an estimated five lakh farmers are engaged in growing plantations and around 12 lakh hectares on a cumulative basis across the country have been brought under plantations due to intensive efforts mounted by paper mills over the last several years. This has generated significant employment opportunities for the local community, especially in the rural areas, and also significantly supplemented the income of farmers and helped check the rural-urban distress migration, apart from the significant environmental benefits in terms of increase in country’s green / tree cover, carbon sequestration, restoration of degraded land, mitigating climate change, etc." He felt, policies and legislative changes to promote agro forestry will certainly provide a fillip to the efforts of the paper industry.

Mehta said, "The increase in the basic customs duty on recovered paper / wastepaper, an important raw material used by the paper industry, from nil to 2.5% has come as a dampener."

In his statement he said, "The industry is passing through challenging times and is hard pressed for raw materials in view of supply side constraints. Increase in duty on wastepaper will add to the production cost. Since the domestic paper recovery rate in India is around only 40% as compared to over 70% in developed countries, import of recovered paper / wastepaper is necessitated for domestic value addition to meet the growing demand for paper in the country. Any imposition of import duty on recovered paper / wastepaper is not justified till the time that the collection and recovery of wastepaper in the country does not increase significantly through efforts by all stakeholders."

PrintWeek's view: Demand for paper in India is 6-8% per annum. The Indian paper industry is capital intensive. On an average it requires over Rs 2,000-cr to create a viable greenfield integrated paper mill as per today’s cost and price. As a result there is a huge demand-supply gap. The industry will eye the agro forest model to meet the extra paper requirements. This means, higher cost of operations.