Print Media heads call imposition of customs duty on newsprint a shocker

The Indian Newspaper Society has requested the government to withdraw the 10% customs duty on newsprint; industry leaders say the Budget decision will lead to increase in cover price & ad rates  

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Finance Minister Nirmala Sitharaman in her maiden Union budget speech hit the newspaper industry with her announcement of 10 per cent customs duty on newsprint. This comes as a jolt to the industry as the newsprint price had started stabilising from last October and the price now stands somewhere close to $700 per tonne, as compared to an all-time high of $820 per tonne.

The Indian Newspaper Society (INS) issued a statement on Monday, requesting the government to withdraw the 10 per cent customs duty imposed on newsprint, and uncoated paper used for printing of newspapers and light weight coated papers used for magazines.

“Publishers of Newspapers and Magazines are already reeling under severe financial pressure due to many factors like lower advertisement revenues, higher costs and digital onslaught from technological giants.  Small and Medium newspapers will go into deeper losses and many of them will be forced to close down,” said the INS statement. 

It further said, “The total consumption of Newsprint in India is estimated at 2.50 million tonnes per annum and the capacity of the domestic industry is only 1 million tonne.  In the case of uncoated (glazed) and light weight coated (LWC) paper there are no domestic manufacturers. So, the INS calls for urgent intervention of the Government to save the Indian newspaper industry by scrapping the unbearable burden imposed on it.”

The newspaper industry in India witnessed a huge hike in the cost of production a year and half back as newsprint price went up 40 to 60 per cent. The price hike was attributed to increase in raw material cost, downfall of Indian rupee against US dollar and China imposing a ban on import of paper waste. A large share of newsprint used by most of India’s top newspapers and magazines are imported from countries like China and the United States.

While Customs duty was not applicable to this category earlier, the Centre has now also imposed a 5 per cent customs duty on imported books.

According to industry experts, the print media can tackle the situation by either increasing the cover price or by increasing the advertisement rates. Currently, there are no domestic manufacturers for uncoated (glazed) and light weight coated (LWC) paper. 

Jayant Mammen Mathew, Executive Editor of Malayala Manorama and President of the Indian Newspaper Society, says the decision is another jolt for the newspaper industry that is already struggling. 

“Imposing customs duty will affect the newspaper industry, especially when the print media is going through a very challenging time. Last year, the newsprint price was very high, and the prices had just softened. This is another hit for another year. Unless the decision is withdrawn, there will be many job losses and several print players will be forced to shut down,” said Mathew. 

“We might have to increase cover prices as well,” added Mathew. 

Speaking to exchange4media, B Srinivasan, Managing Director, Vikatan Group said, “In India, the manufacture of newsprint is paltry compared to the demand. It is hugely challenged in quality due to the nature of our input material. We use hardwood, recycled pulp and bagasse, while European, Canadian, Chinese and Australian newsprint is produced from softwood that brings in the appropriate texture for colour reproduction, a must for any newspaper of repute today. We have virtually no capacity to produce glazed newsprint, or LWC, the mainstay of consumption of magazines.”

Calling the Budget decision a shocker, Srinivasan said, “The newspaper industry’s situation could not have escaped the FM's meticulous eyes. It comes as a shocker to the industry that she chose to use the ironic words 'To encourage domestic publishing and printing industry...' and served us an import duty of 10 per cent on literally all of the paper that the industry imports,” he added. 
    
Speaking about the consequences of the move, Srinivasan said, “The impact runs in crores for Vikatan and to 1000's of crores of import duties (excise) that cannot be set off against the GST on advertising revenues - a double whammy for an industry already reeling under advertising de-growth this first quarter. This only leads me to believe that the government feels that the newspaper does not carry the 'appropriate' influence of the masses and hence needs to be muzzled with such a draconian imposition of duty at a time when print is facing its toughest headwinds.”

Speaking on tackling the situation, Srinivasan said, “It is clear that we are collectively going to lose 1000's of crores from our profitability, as the prospects of passing on this expenditure to wither the advertisers or our readers don't seem very bright.”

“We will need to reinvent ourselves with a bevy of belt-tightening activities but more importantly, this profitability hit will probably stifle innovation and exploration of the print media, something that the Fourth Estate can ill-afford at a time like this,” Srinivasan added.
    
According to L Adimoolam, Director, Dinamalar, the move on imposing customs duty will affect the sales growth and readership of newspapers in the country.

“The advertisement spend is at a very low rate, currently. In my opinion, only the No. 1 and No. 2 dailies will be able to survive. The medium and smaller newspapers are struggling, and the only way to tackle the situation is by increasing the advertisement rates and cover price but both will result in dip in sales and drop in readership. The advertisement spends will be channelised to digital media which will have an adverse effect on the newspaper industry in the country,” said Adimoolam. 

At the same time, the Indian Newsprint Manufacturers' Association has welcomed the move. 

Vijay Kumar, Secretary General of the Indian Newsprint Manufacturers' Association said, “In January 2019, the Government of India delivered a bonanza, increased advertisement rates when import price of newsprint was $800 per month and the print media termed it as a growth accelerator. Today imports are available at an abnormally low price of $450. Even with a 10 per cent import duty, it is still a win-win situation. The decision has been taken based on recommendations. Thus, the move has good chances of reviving the indigenous newsprint industry.”

Notably, the Indian Readership Survey (IRS) Q1 data, released by Media Research Users Council (MRUC) in April, had shown an upward trend for print consumption.

According to the IRS data, which is the world’s largest readership survey, the dailies have added 1.8 crore additional readers since IRS 2017, while magazines added 90 lakh readers.

In an effort to boost confidence, Srinivasan said the print players were hopeful of coming out of these troubled times. “We are survivors, and we will find a way of out this situation too,” he remarked. 

With inputs from Tasmayee Laha Roy

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