The Hindu Business Line : Kraft paper price hike hits packaging industry

THE corrugated packaging industry in the small-scale sector today finds its viability increasingly eroded by the periodic price hike in Kraft paper, its principal raw material, and other inputs. The erratic supply of Kraft paper from mills is adding to its cup of woes.

In a statement issued here, the President of the Federation of Corrugated Box Manufacturers of India (FCBM), Mr Harish Madan, said Kraft paper mills have announced another price hike of Rs 1,000 per tonne across all varieties since last month. The first increase was as recent as in May 2005 of a similar amount, and the total increase till now for the small-scale industry works out to Rs 3,500 per tonne.

To compound the crisis afflicting the corrugated box industry, the prices of the other critical inputs such as stitching wire, adhesives, ink and power have shot up in the last few months mainly due to the increase in the costs of steel and other commodities. Inward and outward freight costs too have escalated on account of frequent diesel price revisions, even as the FCBM members have to absorb the burden of service tax on goods transport.

Mr Madan said the industry is appealing to the authorities to allow import of Kraft paper at nil rate of customs duty and also to give the industry a chance to upgrade its quality to global standards at affordable prices. Being in the SSI sector, the box industry is based completely on recycled fibres, Mr Madan said. The industry is serving the packaging needs of the economy by successfully substituting wooden boxes and contributing to eco protection, he said, adding that it needs policy support at this crucial juncture.

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