As newsprint prices go up, industry seeks help from government

With the pandemic affecting circulation and ad revenue, many newspapers have already shut shop and those still in business are now looking to the government to bail them out. The print industry feels it is time the government to extend a helping hand for them to stay afloat.

 

To add to the worry, in the last three months, newspaper cost has jumped 20% resulting from the post-pandemic demand-supply imbalance, prompting news publishers to petition the government for waiver of 5% import duty to help cut cost.

 

Meanwhile, the Directorate of Advertising & Visual Publicity’s (DAVP) rates for advertising in newspapers are much lower than the commercial rates and this brings down their margins. For many years, INS has been asking the government to increase the prices.

 

According to INS, an independent body that protects the interests and freedom of newspapers and periodicals in India, the industry is reeling under a crisis as both advertisement and circulation revenue have dropped considerably. It said the industry has lost around Rs 12,500 crore in the last eight months.

 

L Adimoolam, president of INS, and the publisher of English magazine Health and The Antiseptic, a sister concern of Dinamalar, a Tamil newspaper, told the media that imported newsprint did not attract any duty for 65 years. “When the Centre imposed 10% customs duty on imported newsprint, we requested for a reduction and it was slashed to 5% last year. We are now seeking removal of this duty," he said.

 

According to KPMG estimates print media revenues will contract by 38% in FY21, compared with the previous fiscal, buffeted by Covid-linked economic contraction.

 

Under the circumstances, the industry needs government help.

 

Adimoolam met Union Finance Minister Nirmala Sitharaman on 17 January. During the meeting, he pointed out that it would take two or three years for the industry to recover and requested the Union finance minister to provide relief for the print media in the upcoming Budget and presented five demands.

 

Adimoolam stressed on the need for the government to look into the rising costs of newsprint and dependency on imported newsprint, domestic mills not holding newsprint stocks and increasing their prices sharply. He also requested abolition of customs duty on imported newsprint, extension of Directorate General of Trade Remedies for submitting anti-dumping, and extension of validity of RNI Circulation Verification Certificate to 31 March 2022.

 

“Considering the quantum of import and the customs duty at 5%, it will utmost 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 if the government can consider abolishing customs duty on import of newsprint,” he said.

 

In a news reports published in 28 December 2020, Varghese Chandy, vice-president, marketing and advertising sales, Malayala Manorama, said, “The government should look at helping the media as it needs hand-holding now. Newspapers are not like any other product. They impart information. The government should help the media that imparts credible information, especially during times of fake news. Newspapers shouldn’t have to close down.”

 

Meanwhile, Mohit Jain, executive director at Bennett, Coleman & Co and vice-president of INS, said the local mills do not manufacture sufficient newsprint and its quality does not match that of imported newsprint; so, newsprint of 42-gsm and below should be exempted from anti-dumping duty as it is not made in India.

 

The INS note also added that the government should consider hiking the rates it pays for advertisements (through the Directorate of Advertising and Visual Publicity) by 50%.

 

“We have been asking for the stimulus package. The government is helping a few industries with stimulus packages. We are (also) expecting some stimulus,” Adimoolam told the media.

 

Newsprint cost up by 20%

 

In the last three months, leading domestic producers such as Emami Paper Mill, Khanna Paper and Shree Rama Newsprint have already increased their prices by Rs 3,000 to Rs 4,000 per metric tonne.

 

After the pandemic, reportedly three-million tonnes of newsprint capacities have been closed or converted to brown paper grades worldwide, resulting in a demand-supply imbalance. The Indian publishers continue to be dependent on imported newsprint, due to insufficient domestic capacity/output and poor quality.

 

According to INS, prices of newsprint have shot up by 20% in the last three months. Another increase of 10-155 is in the anvil next month which will severely impact the publishers.

 

However, the Indian Newsprint Manufacturers Association (INMA), which represents newsprint industry said enough capacity is available and the domestic industry is having full potential to provide unstinted support to print media.

 

The domestic new print industry is facing the issue of under-utilisation of the installed capacity as more than 75% market share of the newsprint has been captured by cheap imports and dumping in India by the foreign companies.

 

Publishers cautious

 

Suresh Balakrishna, chief revenue officer, The Hindu, said, “Some stimulus in terms of increasing the existing government rates will definitely help in bringing us back to normalcy. We believe that revoking the 5% import duty will also help as most newspapers import newsprint to a large extent.

 

Shital Vij, publisher of Punjab-based Hindi daily Dainik Savera Times, said, “Companies have reduced the print advertising budget and so the publication has to publish advertisements at a low rate. We are not able to meet the expenses of the publication. People have now gone back to reading the newspaper and the circulation has recovered. So, the government should increase the rate and increase the print advertising budget. They should also subsidise the paper and ink and should take steps to revive the newspaper industry.”

 

MV Shreyams Kumar, managing director, Mathrubhumi, said, “Public sector undertakings (PSUs) should not be given DAVP rates. There is a direction from the I&B ministry that these should be given DAVP rates. That is not possible. These are commercial entities. The government should withdraw the direction given to the newspapers.”

 

(Courtesy PTI and other Agencies)

 

The five demands from INS

 

1 Removal of 5% customs duty on newsprint

 

2 200% increase in government ad spend on print media

 

3 50% increase in government ad rates

 

4 Immediate settlement of outstanding bills for government ads

 

5 Two-years tax holiday

 

(This article first appeared on Printweek.in)