The Hindu Business Line : Paper traders express concern over price hikes

FEDERATION of Paper Traders Association of India (FPTAI) has expressed its concern and anguish over the raising of prices by paper mills on different varieties of paper coinciding with the introduction of four per cent VAT on paper and paperboard replacing the 9.2-per cent sales tax on the same products.

The Federation has stated that a section of large paper mills has revised prices in March and is going ahead with a plan to announce a second increase soon, thereby negating the sobering effect of VAT and its subsequent positive impact on lowering of prices of paper and paperboard.

While thanking the Chairman of Empowered Committee of State Finance Ministers, Dr Asim Dasgupta, for his understanding the need of bringing paper, paperboard and articles made thereof under the four per cent VAT slab, a spokesman of FPTAI said this would go a long way in increasing the rate of literacy and also fulfilling the packaging needs being fuelled by the booming retail sector and increasing consumerism.

In fact, FPTAI has so long been demanding that all products covered under Chapter 48 of the Excise & Customs Rules be brought under one slab of 4 per cent. However, the Federation is concerned about certain provisions in the classification of paper and paperboards and articles made thereof in various states.

Reiterating its concern over the successive revision of prices by the paper mills, the Federation feels that it is the customer who will be denied the benefit of VAT. In a given situation, the paper traders cannot be held responsible for selling paper and paperboard at higher prices as they will, quite simply, pass on the impact of price revision to the customers.

However, FPTAI has suggested to the Union Ministry of Commerce to bring down import duties on paper and paperboard to the level of the Asean countries (0 to 5 per cent) so as to encourage imports of paper and paperboard at competitive prices.

Incidentally, prices in the international markets have softened in recent months.

It is pointed out that the custom duty reduction, if implemented, would make the packaging and printing segment more cost effective and will help augment exports of packaging and printing products.

Moreover, this may give a boost to the paper trade, which intends to be part of the growing and increasing demand of paper and paperboard.

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