IPMA strongly recommends CST at 1 per cent

India is rated as the fastest growing paper market on the back of a comparatively healthy GDP growth. The domestic paper industry is estimated to be around 10 million tonnes. Of this, the writing paper segment accounts for 3.8 million tonnes, packaging grade paper around 4.5 million tonnes, while the newsprint industry is about 1.7 million tonnes.

As per projections, the paper and paperboards industry is expected to reach 20 million tonnes by 2020 and 40 million tonnes by 2030 with an annual rate of 8 per cent. It is expected that demand from the academic, corporate, industrial and retail paper segments will keep paper production upbeat.

Demand for newsprint is also likely to remain strong due to a healthy outlook on the print media industry and new edition launches and also due to effort of print media companies to increase more circulation to capture more market-share.

Indian Paper Manufacturers Association (IPMA), an apex body of the Indian Paper Industry in their pre budget recommendation have raise some critical issues, which they think the previous union budget, had failed to address.

They have proposed that the government should retain the basic custom duty at 10 per cent and also to re-introduce the component of SAD. Customs duty on import of fiber viz: wood logs/wood chips and all types of wood pulp/waste paper should be pegged at zero percent.

Paper industry suffers from inadequate supply of coal and paper mills are forced to use imported coal for their energy needs. So the association has asked to consider duty free import of coal to overcome the crisis.

Excise duty was increased from 4 per cent to 5 per cent in Budget 2011-12 and they have recommended the same to be reinstated to 4

per cent. They want the rate interest for delayed payment of duty was increased to 18 per cent may be reinstated to earlier 13 per cent and for the sake of simplication they have suggested to collect all levies under one head.

Import of printed materials at zero or lower custom duty should be closely monitored to protect the printing industry and promote the use of indigenous paper.

Under direct taxes front they want the depreciation rate for plant & machinery to be restored to the earlier rate of 25 per cent, as the machinery gets obsolete in short span of time.

They have requested that time limit of 31.03.2010 for eligibility of deduction under U/S 80IA for power generation / distribution should be extended upto 31.03.2020 which will benefit would promote setting up captive power plants by industries, which will reduce the load on the National Grid.

Due to the fact that the paper industry suffers form technological obsolescence they suggest that government should help the industry players certain fiscal support in terms of soft loans and subsidies, to have meaningful impact on operation, profitability and sustainability of the mills.

IPMA has suggested that GST should be allowed at lowest possible rate for the paper industry and it should neutralise all input taxes, which are levied, by the Centre and States by providing for input tax credit seamlessly across the supply chain. It also strongly recommends that Central Sales Tax (CST) rate should be brought down from current 2 per cent to 1 per cent, as high CST is a cost for manufacturers leading to increase in prices.