Acknowledging that Indiaâs newspaper industry is going through a difficult phase, the Narendra Modi government has decided to reduce the customs duty on imported newsprint from the existing 10% to 5%.
In her budget speech in Parliament on Saturday, Finance Minister Nirmala Sitharaman said, âIn the previous budget, basic customs duty of 10% was imposed on newsprint and lightweight coated paper. However, since then I have received several references that this levy has put additional burden on print media at a time when it is going through a difficult phase. I propose to reduce basic customs duty on import of newsprint and light-weight coated paper from 10% to 5%.â
Earlier, there was no import duty on newsprint but in last yearâs budget the government had imposed a 10% duty.
In the last one year, the newspaper industry had made several representations to Sitharaman, requesting her to withdraw the duty.
Reacting to the announcement, Girish Agarwaal, Promoter Director, Dainik Bhaskar Group, told BestMediaInfo.com, âThe print industry has been seeking a withdrawal of this duty introduced in the last budget, considering the lack of domestic capacity to fulfil the industryâs demand, thereby making imports imperative. Nonetheless, the 50% reduction is a positive move as it will ease the burden on newsprint cost, which is a key cost component for the print industry.â
Agarwaal said the import duty cut would allow them to invest more in editorial resources, âIn an otherwise challenging business environment, this reduction will prove helpful and may be channelised into increasing content and strengthening editorial credibility that will ultimately benefit the readers.â
Karan Darda, Executive Director, Lokmat Media Group, also said the reduction in import duty was much needed. âWe welcome the proposed reduction in customs duty on the import of newsprint and light-weight coated paper. In recent years, the newspaper industry has been facing many headwinds and the environment has overall been very challenging. 10% customs duty was introduced last year and that added to the burden. The reduction in customs duty would ease the burden and help the industry in this critical juncture,â Darda told BestMediaInfo.com.
Indiaâs print industry is going through its toughest phase as all newspapers have seen their revenue and profitability shrinking sharply. In the last one year, the hike in newsprint prices because of additional duty along with low ad spend resulted in a stressful situation as several print editions were shut down.
Indiaâs second largest media company HT Media Ltd, which is listed on the BSE, has been posting losses for the last two quarters of this fiscal. The company was in losses in the last financial year as well. Other listed companies such as Dainik Jagran and Dainik Bhaskar arenât doing any better as well. Indiaâs largest print media company BCCL (Times group) is also seeing a downward trend in its revenue. The company in the current fiscal has already taken several measures to reduce the operational cost.
Elaborating on the positive impact of the government announcement, Utkarsh Sanghvi, Partner, Indirect Tax, Media & Entertainment, EY India, said, âCurrently, the newsprint cost for any publication is around 30% of the total operational cost. So a 5% reduction on the 30% of the overall cost would mean substantial gains for the publishers.â
Explaining further, Sanghvi said, âAssuming that somebody has a turnover of Rs 5,000 crore, so Rs 1,500 crore is the newsprint cost. And 5% of that will be Rs 75 crore.â