Cost for paper used by newspaper and magazine publishers up 20% in a quarter.
The jump of 20% in the cost of newsprint in the past three months has caused a great worry in the publishing industry already under immense pressure due to business slowdown due to various factors including COVID-19 related months of lockdown conditions. Cost of paper has seen a steep rise, prompting news publishers to urge the government for import duty waiver to help cut cost.
Newspapers and magazines were experiencing a steep fall in demand with the customers (readers) fearing and avoiding products – including newspapers and magazines – that could be potential carriers of virus. The industry was already facing hardships due to a slowing economy before the pandemic and was hit hard with this fall in readership.
No amount of assurance including medical theories refuting transmission of virus through packaging materials, paper and newspapers or magazines, could bring the demand on track even after the lockdown restrictions got lifted, industry reports say.
With about 3 million tonnes of manufacturing capacities either closed or converted to brown paper grades worldwide, drastic fall in supplies of newsprint was experienced causing the recent rise in cost of newsprint. This proved another blow to the already suffering industry struggling for survival.
“Most newspapers have stopped sending the hard copies to the rural areas with readership of less than 50 copies, to reduce the distribution cost,” says L Adimoolam, President, Indian Newspaper Society (INS).
In a representation to Finance Minister Nirmala Sitharaman, INS has suggested cutting customs on import of newsprints.
They also want a fiscal stimulus package for the industry or raising tariffs of government advertisements by 50 per cent.
“If working out a stimulus package for print media is difficult at this juncture, DAVP (Directorate of Advertising and Visual Publicity) may please consider releasing advertisement for all its departments to all publications with an increased tariff of 50 per cent, which would be highly helpful for the industry as a whole,” the INS representation said.
It has also sought extension of the validity of RNI (Registrar of Newspapers for India) Circulation Certificates up to March 31, 2022, which will enable DAVP rates to remain the same till next year.
It is estimated that the print media would take two-three years to recover from the current situation, the INS added.
Many newspapers have shut down editions, reduced the number of pages and cut staff to cut costs. There are many small papers that have also been forced to close down due to the hard conditions.
“Prices of newsprint have shot up by 20 per cent in the past three months. Another increase of 10-15 per cent is on the anvil next month which will severely impact the publishers,” said the INS in the memorandum. Domestic producers are severely under-stocked on their raw materials to supply adequate quantities, it added.
Indian publishers highly depend on imported newsprint due to many factors including insufficient domestic capacity/output and poor quality. Moreover, leading domestic newsprint producers have already increased their prices by Rs 3,000 to Rs 4,000 per tonne.
Requesting to remove 5 per cent customs duty, the INS said the tax would yield Rs 200 crore to the government exchequer in the next fiscal. “But, in view of the grim situation, it would be a great relief for the print industry.”
However, the Indian Newsprint Manufacturers Association (INMA), which represents the newsprint industry, has said enough capacity is available and the domestic industry is having full potential to provide unstinted support to print media.
The domestic newsprint industry is facing the issue of under-utilisation of the installed capacity as more than 75 per cent market share of the newsprint has been captured by cheap imports and dumping in India by the foreign companies. The current domestic capacity of the newsprint industry is 2.2 million tonnes per annum (MTPA) and over 1.5 million tonnes is under-utilised due to continuous offloading of cheap imports.
However, Adimoolam counter by saying, “Almost 100 per cent newsprints produced by the Indian manufactures are being consumed. Only the balance is imported.”
“The Indian newsprint industry produces newsprints below 45 gsm and the most of the newspapers in India now use 40 gsm and 42.5 gsm,” he adds.
The shift from 40 gsm to 45 gsm means creating a 12 per cent difference in the cost. Also, the newspaper industry uses high-speed machines for printing and the domestic newsprint has issues with that, Adimoolam said.
The Indian newspaper industry required 2.5 MTPA and the domestic production is around 1 MTPA and the balance 1.5 MTPA is being imported by the publications.