Assocham urges govt to reissue 10% customs duty on paper imports from ASEAN nations to cushion local industry

New Delhi: A day ahead of the ASEAN-India Commemorative Summit here, Assocham on Wednesday urged the Centre to re-impose 10 percent customs duty on import of paper and paperboards from the ten-member South East nations’ bloc. "In order to provide a level-playing field to domestic industry, Assocham has suggested the Union government to keep the paper and paperboard products in the negative list (i.e. no preferential treatment) while reviewing existing free trade agreements (FTAs) and formulating new FTAs," the chamber said.

Such measures would ensure that capital already invested and proposed to be invested in further capacity creation by domestic industry is safeguarded, incentivised and grown further, noted the chamber in its pre-budget recommendations on indirect taxes submitted to the government.

"Nil rate of customs duty on import of paper and paperboards from ASEAN countries leads not only to revenue loss of about Rs 80 crore per annum to Indian government but it also leads to exporting of domestic jobs to other countries and significantly impacts economic viability of many paper mills across India," it said in the pre-budget recommendation.

Representational image. Reuters.

The current demand for paper and paperboards in Indian market in 14.4 million tonnes per annum (MTPA) which constitutes about 3.6 percent of global demand and is expected to increase to 20 MTPA by 2020 thereby clocking a compounded annual growth rate (CAGR) of about seven percent, said the chamber.

"Even as industry is grappling with issue of producing paper and paperboards at competitive costs, the problem has been exacerbated by Government's policy of extending preferential tariff treatment to the sector under FTAs and other bilateral/multi-lateral trade agreements and pacts, said DS Rawat, Secretary General of Assocham.

"India has signed FTA with ASEAN as per which import duties on most of the paper and paperboards is being progressively reduced i.e. from a base rate of 10 percent to 7.5 percent from January 1, 2010 to five percent from January 1, 2011 to 2.5 percent from January 1, 2013 and to nil rate from January 1, 2014," said Assocham.

The chamber highlighted that the US and the European Union have imposed anti-dumping /anti-subsidy tariffs on import of paper and paperboards from China to protect their domestic industries.

"Further, economic slowdown in developed economies and export dependent economies like ASEAN have led to excess capacity in paper and paperboard manufacturing countries. As such, these countries find India as an attractive outlet for diverting their excess inventory thereby taking advantage of low customs duty rates," it said in a statement.