India's paper industry asks government to eliminate duties on wood imports to help defray sector's rising input costs, as paper demand is not strong enough to support price hikes; average paper price is down 3,000 rupees in past three months

LOS ANGELES , May 30, 2014 () – Rising input costs combined with declining paper prices are squeezing profits at India’s paper mills, and the industry is asking the government to help by eliminating duties on wood imports, reported Business Today on May 29.

There is now a 5% tariff on wood imports from countries not part of the Association of Southeast Asian nations (ASEAN). This raises prices for wood-based feedstock consumed by India’s pulp and paper mills.

The Indian Paper Manufacturers Association met with finance ministry officials last week to request reducing the duty to zero, said Sanjay K. Singh, VP of the association and divisional CEO of ITC Paperboard and Specialty Papers Division.

Wood prices have doubled in the past couple of years, said Singh. Excluding the 5% import duty, the landed cost of imported wood is about 13,000 rupees (US$219) per tonne, Business Today reported.

The industry cannot pass along cost increases because of weak demand for paper. In the past three months, the average paper price has declined by 3,000 rupees/tonne, he said.

India’s paper mills must import wood for their feedstock because of a severe shortage of domestic pulpwood, which is also going up in price due to rising cost of imported wood, said Singh.

“Raw material has become a nightmare for the industry,” he said, reported Business Today.

The paper industry in India has a return on capital as low as 4%-5%, which makes it difficult for mills to survive and prevents future investment in the sector, noted Singh.

The primary source of this article is Business Today, Film City, Noida, India, on May 29, 2014. Click here to view full version of primary source's original article.

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