Finance Minister Nirmala Sitharaman’s maiden budget gave something to cheer for the overall media sector, proposing to consider increasing the foreign direct investment (FDI) cap on several sectors including media.
However, the introduction of import duties on newsprint used in newspapers and magazines has dampened cheer in the print sector, with print media profitability having already been hit hard by the sharp rise in newsprint prices on the global market over the last financial year.
“To encourage domestic publishing and printing industry, 5 per cent customs duty is being imposed on imported books,” Sitharaman added. While prices have stabilised since October, having shot up by over 50 per cent in the first half of the last fiscal year, the imposition of 10 per cent import duty on newsprint is likely to extend the segment’s woes.
A large portion of newsprint used in most of India’s top newspapers and magazines are imported from countries like China and the United States. According to industry sources, the stabilisation of prices in newsprint were expected to take effect from the second quarter of the current fiscal year.
“Most had stocked up inventory and subsiding prices were expected to improve profitability from the second half of the year, but the import duty imposition may wipe out the gains from the fall in global newsprint prices,” said an industry analyst.
But, the high level of imports have raised concerns that local players have not been given enough support and the local newsprint industry has reacted positively to the development, saying that it will give a helping hand to local paper manufacturers.
The Indian Newsprint Manufacturers Association, for instance, welcomed the government decision having earlier sought government intervention to create a level playing field.
The industry body has been stating that cheap imports had been making domestic mills unsustainable. “Thank you for addressing the concern of level playing field to the domestic newsprint mills vis-a-vis imports. (The) removal of end-use-based import duty exemption on newsprint (is) a welcome step to plug the malpractice and arrest tax evasion in imports. Smart move to curb loss to the exchequer,” the association said.
Other manufacturers like Emami, which has been trying to exit the paper business, agreed that this would help domestic manufacturers. “Levy of custom duty of 10 per cent on imported newsprint, uncoated and lightly coated paper will boost the domestic industry and create a level playing field,” it said.
There are problems with relying on the domestic newsprint industry, however, with industry analysts noting that the unremunerative nature of the business in India had led to the number of operational paper mills in the country to fall sharply to less than 50.
Reaction mixed on import duty on books
While domestic publishing industry representatives have hailed the move to impose customs duty on imported books, others say that the measure will not help in boosting domestic publishing and only make books imported from overseas more expensive