Financial Daily from THE HINDU group of publications
Tuesday, Jul 09, 2002
Industry & Economy
Paper, Board & Newsprint
Review duty on newsprint: FICCI
NEW DELHI, July 8
INDIA Inc has requested the Finance Ministry to examine the anomalies that have crept in the matter of imposition of Customs duty on newsprint import.
Commenting on the issue, the Federation of Indian Chambers of Commerce and Industry (FICCI) said that in the last Budget the Government had taken a pragmatic approach aimed at multi-directional growth of the economy and for the elimination of inherent delays and avoidable expenditure. In the process, however, certain anomalies had inadvertently crept in which required to be reviewed and necessary corrective steps taken, the chamber said.
"In the matter of imposition of Customs duty on imports, the Government in the Budget had stressed the principle that the duty on finished products should be higher than that on raw materials in order to encourage the proliferation and growth of domestic industries," the chamber said.
"With considerable restrictions on the use of wood-based raw material, mainly keeping in mind and the need for conservation of fast-depleting forest resources, and owing to technological handicaps currently involved in the large-scale use of agro residues, more and more responsibility will have to be shouldered by the small paper manufacturers for ensuring sustained growth of the paper industry," industry sources said.
FICCI, meanwhile, has also written to the Finance Ministry stating that the paper and paperboard and most importantly the newsprint manufacturers are currently reeling under the impact of recession and during the last couple of years the margin of profit has been considerably eroded and has been alarmingly low and the cash loss is huge.
"Several of the units manufacturing newsprint, because of their inability to break even and consequential escalation in the input and interest costs and loss of competitive edge, have to close down their operations," FICCI said.
The total requirement of newsprint in the country today is around 10 lakh tonnes. The domestic production of newsprint by the existing manufacturers can fully meet the country's demand, as the installed capacity is around 12 lakh tonnes. Currently, approximately five lakh tonnes of newsprint are being imported at the cost of around Rs 1,000 crore to the country's exchequer.
Currently on import of newsprint, there is a customs duty of five per cent only. "Due to negligible duty on import of newsprint, large quantities of the same are being dumped from South-East Asian countries, Russia and America and the indigenous industry is suffering badly. The above duty is even less than the duty on raw material i.e., waste paper whereon the duty incidence is 9.2 per cent (basic duty five per cent plus SAD four per cent). WTO bound rate for newsprint is 25 per cent," FICCI said.
To resolve the anomaly, the Customs duty on import of newsprint should be raised to 25 per cent, which is WTO-bound rate, and newsprint import should attract SAD at the rate of four per cent because indigenous newsprint manufacturers are also subject to sales tax and other local levies, the chamber said.
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