'Didn't ask for stimulus but hoped for custom duty waiver on newsprint'

Much to the disappointment of the newspaper publishers, Finance Minister Nirmala Sitharaman had no good news for the industry in the 2021 Union Budget. Hit by circulation issues in the wake of the ongoing pandemic that led to dwindling profits, the industry was hopeful of the waiver of 5% custom duty on newsprints. 

Newsprint prices have suddenly gone up by 20%-25% because of various external factors and thus any announcement on duty cut would have helped the newspaper industry to control their production budget. However, no such relief came their way.

“Like every other industry, even the publishing industry is going through a crisis in the wake of the pandemic. We are not asking for any stimulus but we were expecting that the custom duty on newsprint would be waived off in the budget. 50% to 60% of our production budget goes into newsprint acquisition and at a time when newsprint prices are touching an all-time high and are expected to go up further, the custom duty is an additional burden,” said MV Shreyams Kumar, Managing Director, Mathrubhumi.

Already under pressure from the growing digital business, increasing newsprint prices and falling revenues, print media hit a roadblock in 2019 when Nirmala Sitharaman announced a 10 per cent customs duty on newsprint. The following year, the duty was slashed by 50% helping print media in reducing costs. It was said reducing the custom duty by 5% in 2020 would save print publishers anywhere between Rs 1500 and Rs 1700 per tonne of newsprint. Production costs, however, remained a pain point for the print industry with newsprint prices touching $500 per tonne from under $300 per tonne.

The print industry and travel industry, which offers job opportunities to several lakhs of people, were the worst affected by the pandemic said L. Adimoolam, president of the Indian Newspaper Society.

‘We expected some specific SOPs like the abolition of Customs Duty on Newsprint import, waiver of GST for the newspaper industry, which have not been addressed by the Finance Minister,” he said.

However, the INS still have hopes around holistic economic development that would invariably be a boost consumer sentiment and lead to better numbers for print. “The Finance Minister has set up a huge outlay for agriculture, infrastructure projects, disinvestment of PSU, infusion of funds to Banks, extending minimum wages for all types of workers, radical changes in direct taxation etc. money circulation can be expected in the market. The budget offers overall growth which will be a breather for the print media. When the economy looks up, the print media can also be benefitted,” he added.

Shailesh Gupta, Director, Jagran Prakashan Ltd, and Midday believes that CESS burden may be neutralised by the reduction in excise rate, which is also one of the budget proposals. However, he bemoaned how the "fourth pillar of democracy" gets ignored year-after-year in the national budget despite being one of the worst-hit industries. "Let us see how many of us really survive through an increase in newsprint prices with really no visibility of ad revenue coming back to pre-Covid level soon," he added.

While no changes in custom duty for newsprint has disappointed publishers across the board, smaller newspapers feel such moves hit them harder. "We were very hopeful about waiving off of the custom duty at least for the year because the business has taken a tremendous blow this year. So many of the newspapers have had to shut shop. At a time like this, the custom duty waiver would have been a blessing especially for a category that had no duties on it until 2 years back. When the cutom duty was slashed to 5% we couldn't enjoy the benefits immediately because most of us were using inventory from the last batch where we paid 10% custom duty and by the time we were finished with the new inventory and acquired newsprint at 5% custom duty we were in a pandemic and we incurred huge losses in ad revenues. It has been a stressful two years for print media especially smaller players," said the owner of a small scale regional daily from Bengal.