Paper industry hails decision to review ASEAN-India FTA

CHENNAI: The government's decision to review of ASEAN-India FTA has been hailed by the paper industry which has asked for putting paper & paperboard on the negative list so as to provide a level playing field for Indian paper manufacturers who have been bearing the brunt of indiscriminate import of cheap paper, especially writing & printing paper, from ASEAN countries.
Ever since ASEAN-India FTA came into force on January1, 2010 and basic customs duties were progressively reduced to nil in India, imports of paper & paperboard from ASEAN, especially writing & printing paper, have increased at a frantic pace, Indian Paper Manufacturers Association (IPMA) has said in a communication to the ministry of commerce & industry. From just under 29,000 tonne in 2010-11, it has now hit nearly 343,000 tonne in 2019-20. ASEAN's share of paper imports has jumped from 5.4% n 2010-11 to 21% in 2019-20. This represents 1,100% growth.
In terms of compound annual growth rate (CAGR), over the nine-year period (2010-11 to 2019-20), India’s imports of paper & paperboard from ASEAN have grown at a CAGR of 32%.
“Domestic paper mills have been severely impacted due to imports flooding into the country from ASEAN countries at nil basic customs duty. Several smaller Paper Mills, and even a few large ones, have been forced to shutdown their operations due to commercial unviability. There is adequate production capacity in the country which is currently under-utilised”, said Mr A S Mehta, President IPMA.
Due to the Covid-19 pandemic, both inward and outward supply chains of the paper industry have been totally disrupted, which are yet to fully recover. There has also been a severe demand compression due to the lockdown, and closing down of educational institutes, commercial establishments and downstream printers, publishers, converters, stationery services and others.
ASEAN countries like Indonesia, which have significant domestic excess production capacity, are using this opportunity to push their excess inventories into India at very low prices at nil basic customs duty under AIFTA. This is further impacting the economic viability of many paper mills in India, already under stress, which will not only lead to revenue loss to the government, but also jeopardise the incomes and employment of thousands, especially in rural areas, including farmers who are engaged in agroforestry and supply wood to the Paper Industry, it said.