New Delhi [India]March 08 (ANI/PNN): The corrugated box industry in the country with more than 400 automatic corrugators and more than 10,000 semi-automatic units, mainly in the MSME sector, is facing immense stress in due to the unprecedented cost escalation and resulting supply dislocation over the past two years.
The situation has worsened as prices for all grades of kraft have risen by nearly 25% in recent months, bringing the total increase to nearly Rs. 20 per kg in the last 2 years.
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Some of the recent developments causing the current crisis:-
Imported Waste Cuts: Sanjay Rajgarhia, Chairman – ICCMA informed that one of the main raw materials for Kraft paper mills has more than tripled in the past two years – from around $100 to $330 today today. Container freight has been multiplied by almost 4 and the additional logistical dislocations are creating out-of-stock situations. Domestic waste paper prices are also rising in line with imported waste adding fuel to the fire.
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Levying customs duties on imported waste: To make matters worse, in the recent 2022 budget, the government. of India levied a 2.5% customs duty on imports of all types of waste cuttings.
Energy Prices: Oil prices rose above $100 and coal prices rose sharply again. Freight and transport costs are bearing the brunt of rising energy costs due to the energy crisis.
Other inputs: The cost of starch has skyrocketed and its price has increased by almost rupees. 8 per kg in the last 4/5 months. Likewise, other inputs like ink, thread, etc. rise in sync with the sharp rise in all commodities. The cost of converting box units increased by nearly 50% after including starch and labor cost increases, said Kirit Modi, President Emeritus – ICCMA.
Rising the GST on corrugated boxes from 12% to 18% on October 1, 2021. Combined with kraft paper and other input cost increases, this was the last thing that broke the back of the industry. Box units need to raise almost 50% more working capital to even maintain the current level of operations.
International Paper and Kraft Pulp Prices Are at an All-Time High – In addition to experiencing massive price increases, all international paper and pulp mills are fully booked and offering longer lead times.
Corrugated box is an eco-friendly industry that consumes about 7.5 million tons per year of recycled kraft paper and produces 100% recyclable corrugated boxes to constitute a market of Rs. 40,000 Crores.
The industry employs a workforce of over 7 Lakhs and plays a key role in the Indian economy by enabling the smooth functioning of supply chains for essential goods, which is especially critical in these unstable times.
APPEAL from Indian Corrugated Box Industry
ICCMA (Indian Corrugated Case Manufacturers Association) on behalf of the whole corrugated box industry is appealing to its esteemed customers to save the corrugated box industry by granting at least 20% on the total cost of the boxes, according to Harish Madan, vice president to cover the price increases of kraft paper and converting inputs to remain viable.
The healthy growth of the corrugated box industry is of vital importance, not only to ensure that all manufactured products are provided with sustainable packaging, but also to pursue our honorable Prime Minister’s cherished dream of MAKE IN INDIA.
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