Cost of packaging material to shoot up post-Covid-19 lockdown

The costs of kraft and other writing papers are expected to increase sharply post the Covid-19 lockdown due to a huge shortage of waste paper and a high penalty levied on consignments of imported raw material lying at ports.

Kraft paper is largely used for making cardboard and packaging boxes.

India is completely dependent on imported waste paper for producing kraft and writing paper. After the Covid-19 pandemic, most developed countries are either burning waste paper or using it for landfill to avoid the spread of coronavirus. This has resulted in a huge shortage of raw material for Indian paper mills.

Sunil Agarwal, president, Gujarat Paper Mills Association, said kraft paper prices will skyrocket in the coming days due to a shortage of waste paper availability both in India and abroad, coupled with an additional cost burden.

The price of waste paper mainly determines the price of the finished paper. After a 30 percent fall in waste and kraft paper prices last year, it was been hiked 20 percent gradually since January, even as demand slowed down partially.

However, after the Covid-19 outbreak, many containers of imported waste papers are stuck at seaports with heavy detention charges, demurrages, ground rent, interest, and late-filing fees, Agarwal said.

When lockdown 2.0 was announced, a few paper mills diluted their inventories to fulfill the demand for essential goods packaging.

After managing to meet the salary of workers and various other expenses with great difficulty, Agarwal said, the paper companies are staring at a 1,000-crore detention and various other charges at ports for not clearing the imported consignments.

Many small paper mills in Gujarat are on the verge of closure, putting over one crore direct and indirect employment at risk.

The government should defer collection of GST for one year and implement the decision to abolish port charges during the lockdown period, besides waiver in repayment of bank loan dues, he said.

Leave a Reply

Your email address will not be published.