India removes 2.5% duty on paper imports from Southeast Asia as of Jan. 1, posing a competitive threat to a domestic industry struggling with high production costs

LOS ANGELES , January 8, 2014 () – India has removed its 2.5% duty on paper imports from Southeast Asia as of Jan. 1, posing a challenge to the country’s paper industry that has been facing high production costs, The Hindu Business Line reported on Jan. 2.

Of the roughly 640,000 tonnes per year of coated paper currently consumed in India, about 40%, or 270,000 tonnes, is already sourced from China.

Now, with the duty removed as part of a free trade agreement between India and the Association of Southeast Asian Nations (ASEAN), coated paper could start coming in at lower prices from countries such as Indonesia. South Korea, which is not a part of ASEAN, could be another source of imports.

That would potentially pose a challenge to Ballarpur Industries Ltd. and JK Paper Ltd., India’s two largest coated paper producers.

India’s domestic paper producers are also being squeezed on costs, not least by a shortage of domestically produced pulpwood that has caused prices to skyrocket by 70%-80% to 10,000 rupees (US$161) per tonne in the past couple of years, The Hindu Business Line noted.

The industry has been forced to rely on more expensive imported pulpwood, while the depreciating rupee has made these imports even more costly. This has resulted in a jump in paper prices by 10%-15% in the past year that has lowered the sector’s competitive edge against imported paper.

Prices for cream wove and maplitho paper on the Indian market would also likely drop if imported from South Korea, while demand for copy paper, which increases by double-digit figures annually, will also likely be satisfied by imports, reported The Hindu Business Line.

The primary source of this article is The Hindu Business Line, Chennai, India, on Jan. 2, 2014.

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