Industry chamber Assocham has urged the Centre to impose 10 per cent customs duty on import of hardwood chemical pulp and bleached chemi-thermo mechanical pulp to encourage domestic production.
"The move will provide fillip to job creation and promote overall economic development of India's vast rural hinterland housing pulpwood plantations," the industry chamber said in a statement on Tuesday.
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"These measures would help energise creation of sustainable sources of fibre required by Indian pulp and paper industry," the industry body said in its pre-budget recommendations on indirect taxes submitted with the government.
"It is estimated that more than 1.25 million metric tonnes of pulp approximately valued at $710 million (about Rs 4,600 crore) is imported into India each year," the statement said
In May 2012, government removed import duty on pulp. The customs duty foregone on account of these imports is estimated to be about Rs 245 crore per annum, according to ASSOCHAM.
"Consequent to the customs duty exemption, annual pulp imports are expected to increase significantly in near future to the levels of $2 billion," it said.
"Development of plantation farming to produce raw materials for paper and paperboards industry is a readily available avenue for creating substantial employment opportunities on a sustainable basis," said D.S. Rawat , Secretary General, ASSOCHAM.
However, he added that potential in this regard has been completely undermined by a taxation framework wherein pulp is exempt from customs duties, the statement said.
The chamber has also recommended that import of capital goods required by paper and paperboard industry for technological up-gradation especially aimed at environmental protection and for compliance with Corporate Responsibility for Environmental Protection be exempted of customs duty.