Indian Recycle Paper Industry Needs a Breather, Otherwise Prices of Finished Paper May Skyrocket

20 May 2020

Business Wire India

  • GPMA’ request Government to compensate “COVID-19” damages by giving relief in container demmurage, detention, ground rent, interest, etc. as a result of huge backlog of containers carrying waste paper, lying at ports
  • Collection of GST for one year to be deferred & spread over 120 EMIs, without interest
  • Lockdown days to be erased from calender of 2020, giving breather to many, treating May 18 as March 24 and onwards

Indian Paper Recycling Industry is largely dependent on imported waste paper from various countries. The price of waste paper mainly determines the price of finished paper. In 2019 alone, there was a 30% downward trend in imported waste paper prices, and Indian Kraft Paper Mills had to reduce prices of finished paper by around 30% even after having export orders in hand. This implies that they had an excess supply even after fulfilling domestic demand, said Sunil Agarwal, President of GPMA (Gujarat Paper Mills Association). Beginning of 2020 saw an upward trend in waste paper prices globally, which forced Indian Paper Mills to hike prices by around 20% pre lock-down, which was yet to be absorbed by the packaging industry.
Then came lock-down due to COVID-19 pandemonium. During this lock-down, loads of containers full of waste paper were detained at various ports due to shutting of courier services, transportation, offices of shipping lines and restriction of movement of manpower, resulting in heavy detention charges, demurrages, ground rent, interest, late filing fees etc.
Then lock-down 2 gave permission to few paper mills to operate for essential packaging demand of paper, which were catered somehow by the mills taking stock of the inventories being diluted, but this would not have held for too long. Then came lock-down 3, making it more difficult for the Industry, salary to workers, fixed and various other expenses had become a big pain to survive with the increase in various additional costs due to the extended time frame. Post lock-down, after re-opening, paper industry fears that there will be a huge hike in price of finished paper as waste paper availability has also gone down drastically as many countries are incinerating waste paper out of fear of the spread of virus, and many sending the waste paper to landfill.
Mr. Agarwal further emphasized that the prices of Kraft paper will skyrocket in coming times due to waste paper availability issues domestically and abroad coupled with additional cost burden due to above mentioned factors.
It is estimated that around Rs. 1000 crores will be going down in vain only to shipping lines by way of detention charges etc., a burden, which the paper industry cannot absorb, and it will die, resulting in the closure of paper mills. The employment/manpower involved, directly and indirectly, in this paper industry is to the tune of around 100 lacs and many would be jobless post lock-down."
Therefore, for the survival of Paper Industry, Gujarat Paper Mills Association (GPMA) earnestly requests the Government of India, the following:
  1. Collection of GST for one year be deferred and allow the Kraft paper Industry to pay in 120 EMI, interest free.
  2. During lockdown period, no detention, no demurrages, no ground rent, no late filing fees, no interest whatsoever should be an order by GOI and violation of the order to be penalized, no court proceedings. It should be a simple standing order which everyone has to obey, no between the lines meaning and / or taking advantage of language and interpreting the government order in their own interest. Govt order should be taken in full spirit of the covid-19 situation and benefits passed on.
  3. Lockdown period be deleted from calendar, as if these days were never there, this should imply for everything, march 24 to 17 may should be no more in the calendar of 2020, to treat 18th may as 24th March and onwards, so no bank interest, no bank overdues, no delays in payment, no nothing during these days for recycling industry.
  4. To adequately compensate the Industry towards “COVID-19” damages.
It is very much feared that unless a proper relief package is given by the Government, the Paper Industry will be doomed.

Lalit Garg, Hon. Secretary - GPMA 
Email: [email protected]