The dumping is seriously impacting the economic viability of Indian paper mills. Moreover, this trend jeopardizes the income and employment of thousands of people including farmers engaged in agro-forestry and supplying wood to the industry, besides leading to a loss of revenue for the government. According to the Ministry of Commerce & Industry, India, imports of paper and paperboard in India increased to 742.45 million dollar in 2021 from 482.94 million dollar in 2020, which suggests the pace of import growth.
Considering the concerns of the domestic industry, the Directorate General of Foreign Trade (DGFT) has now rightly introduced Paper Import Monitoring System (PIMS) by amending the import policy of major paper products from ‘Free’ to ‘Free subject to compulsory registration under PIMS’, which will come into effect from 1st of October, 2022. The PIMS will be applicable on import by a domestic territory area unit on a wide range of paper products covering 201 tariff lines, such as newsprint, handmade paper, coated paper, uncoated paper, litho and offset paper, tissue paper, toilet paper, cartons, labels, account books, bobbins, parchment paper, carbon paper etc. However, paper products like currency paper, bank bond and cheque paper, security printing paper among a few others, have been excluded from mandatory registration.
The introduction of Paper Import Monitoring System (PIMS) is well intended to curb imports under ‘Others’ category tariff lines. The previous regulation was marred with loopholes allowing dumping of paper products in the domestic market by way of under-invoicing, entry of prohibited goods by mis-declaration and re-routing goods through other countries in lieu of trade agreements. Countries like China and Indonesia, which have considerable amount of excess domestic production capacity, have been using this opportunity to push their excess inventory into India at very low prices, which attract either zero import duty under the India-ASEAN FTA or a preferential import duty under the Asia-Pacific Trade Agreement. This had given a surge to the paper import at the cost of the domestic paper manufacturers who are operating under challenging conditions caused by Covid-19, import and price related issues among others. A large quantity of paper products is imported under the ‘Others’ category tariff lines only.
This move of the Government of India is set to pave the way for the promotion of ‘Make in India’ and ‘Atmanirbhar’ initiative in this sector too. Further, despite digitalization and Covid-19 related shock to the paper industry, the paper consumption in the country is likely to grow at 6-7% annually and may reach 30 million tonnes by 2026-27 by industry estimates. The per capita consumption of paper in India is very low in India comparing with developed countries, holding immense potential for the growth. India consumes around 5% of the global consumption, while its population is almost 16% of the globe. Now with the increasing focus of the government on education and literacy coupled with continuous growth of the retail industry, quality packing of FMCG products, pharmaceuticals, textiles, booming e-commerce and other segments, the consumption is expected to pick up fast. The domestic paper market presently estimated to be of Rs. 80,000 crore, is expected to expand fast.
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