BUDGET - Paper firms seek tax cuts, duty on imported paper

MUMBAI (Reuters) - The paper industry has sought a cut in excise duty on paper and paperboards and withdrawal of customs duty on import of environment-friendly manufacturing machinery in the forthcoming federal budget.

"Government needs to look at this sector just like the agro sector," Pradeep Dhobale, president of Indian Paper Manufacturers Association (IPMA), said.

In a memorandum to the federal government, IPMA has sought reduction of excise duty to 8 percent from 12 percent now, which it estimates would translate into a loss of 2.92 billion rupees annually to the government.

"What the government is losing due to deduction, will get neutralised by higher sales within a couple of years," Dhobale told Reuters. The Indian paper industry produces 8.5 million tonnes annually, growing at about 8 percent.

IPMA has sought retention of 10 percent customs duty on imported paper and re-imposition of a special additional duty withdrawn last year.

Reduction of duties on imported paper will discourage investment in this sector by domestic firms, the association which has Ballarpur Industries, West Coast Paper Mills, state-owned Hindusthan Paper among its members, said.

Indian paper makers have invested more than 30 billion rupees to upgrade to cleaner technology. The association has sought exemption of 7.5-percent customs duty on imported machinery that would have environmentally friendly processes.

"There is no payback on it, we are doing it for environmental concerns," Dhobale said.