Good news for paper sector! Import duty hike, ban on Chinese imports likely; check Anil Singhvi analysis

In a good news for the paper sector and likely relief for local manufacturers, Zee Business has learnt from its Commerce Ministry sources that import duty may soon be hiked to 20-25% in this segment. Also, a ban may be imposed on cheap Chinese imports as well. 

"As of now, the import duty stands at 10%. India imports goods from China to the tune of nearly 70 crore dollars. Noteworthy, in the past week, nearly 10% rally has been seen in the paper products in China," Zee Business Research Analyst Ashish Chaturvedi said.

Reacting to the developments, Zee Business Managing Editor Anil Singhvi said, "I like this industry for a very long time, and these efforts will result in its turnaround."

Singhvi added, "Two big things are going to happen...1st is pricing power, and 2nd is production power. And, for a rally in any sector these two things are highly important."

Anil Singhvi said that this is a "Win-win situation for Indian companies. They will get a chance to raise prices and over and above that they also get a chance to increase production."
JK Paper, Star Paper, Tamil Nadu Newsprint are some of the companies that investors should take a look at. 

The Market Guru added, "This is a big move in the offing and it may well  effect a re-rating of the entire sector."

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#ZBizExclusive | पेपर सेक्टर के लिए गुड न्यूज !
चीन से होने वाले सस्ते इंपोर्ट पर जल्द लगेगी रोक...इंपोर्ट ड्यूटी भी 10% से बढ़ाकर 20-25% होने की उम्मीद: सूत्र#ZBizBazaar @AnilSinghvi_ @AshishZBiz pic.twitter.com/QNZhySS7IY

— Zee Business (@ZeeBusiness) June 22, 2020

The rise in import duty will come as a shot in the arm for local manufactures in the paper sector. Also, in the longer run, this hike in import duty will act positively in terms of the profit margins of the paper sector companies. However, it is still not clear when this import duty hike will actually be implemented.

The import duty hike and ban on cheap Chinese imports assume significance in the wake of the biggest military confrontation in over five decades that has significantly escalated the already volatile border standoff between the two countries.

Reportedly, the Modi government has sought product-wise details from industry to curb cheap, low-quality imports from China. The government has sought product-wise details of cheap imports, comparison with domestic prices and tax disadvantage, if any, from industry to curb low-quality inbound shipments especially from China to boost domestic manufacturing, a report by news agency PTI said quoting sources. They said a high-level meeting to discuss ways to promote Atma Nirbhar Bharat (Self-reliant India), including cut in import dependence on China, also took place recently in the Prime Minister's office.

The industry was asked to send comments and suggestions on a certain number of goods and raw materials imported from China, which includes wristwatches, wall clocks, ampoules, glass rods and tubes, hair cream, hair shampoos, face powder, eye and lip makeup preparations, printing ink, paints and varnishes, and some tobacco items, the report added. The other details sought include import surge data between 2014-15 and 2018-19; domestic prices of similar goods that are made here, domestic capacity, imports under free trade agreements, and inverted duty issue if any.