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India: MDF duties create challenges for importers

  • August 07, 2009
  • • Source: ITTO's Tropical Timber Market Report
  • • Views: 3353
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India’s fiscal budget, presented on 6 July, introduced new provisions to increase the central excise levy on plywood from 4% to 8%, making imported plywood more expensive. An anti-dumping duty on imported MDF (as described below) will also remain in force. The following duties on imported wood and wood products apply for fiscal year 2009-10: timber logs, 9.35%; sawn timber, 14.71%; and plywood, veneer, fiberboard, softboard and MDF, 24.42%.

The Government of India has provisionally imposed antidumping duties on all imports of plain MDF boards of 6.0 mm and up thickness. Imports are mostly from Malaysia, Thailand, New Zealand, Sri Lanka, and China. India has three factories manufacturing MDF boards mostly producing 6.0 mm and above thickness. Local production was reported to be about 100,000 m³ of which imports were 98,602 m³.

Investigations by government had shown that local industry was not able to compete with imported quality because many local factories had old technology in place. The plant size of local factories is also much smaller compared to the modern factories of other countries. Due to significant increase in demand for plain MDF in the country and with expectations of increasing profits, some producers are also planning to establish new factories in India.

Green Ply Limited representatives have recently said in the June 2009 issue of Wood News that they have launched India’s largest MDF board plant with an annual capacity of 180,000 m³ at a cost of USD53.20 million. This will be the first continuous line and will be manufacturing plain MDF and prelaminated MDF in thicknesses ranging from 2.5 mm to 30 mm with a range of dimensions. Currently, MDF of 2.5 mm up to 5.5 mm is only supplied by imports. The trial production is expected to commence by the end of December 2009. It is expected that this unit will reduce dependence on imports. The factory will be located at Pant Nagar in Uttarakhand State of India.

Another development involves new wood-based industries using plantation grown timber for their raw material requirement. This has given a boost to the establishment of new plantations, which in addition to increasing raw material availability will also improve the environment. One industrial company, ITC Limited, plans to be selfsufficient in meeting raw material requirements in manufacturing paper and related products. It manufactures about 500,000 tons of paper and from 100,000 hectares of eucalypts, su babul (Lucaena leucocephala spp.) and casuarina. As at 30 June 2009, the company has about 95,000 hectares of plantations and is planning to expand by 5,000 hectares. Currently, ITC imports about 130,000 tons of pulp but aims to be self-sufficient in pulp in the next two years with raw material supplied by plantations. The company has focused on expanding the plantations with farmers and other communities for their mutual benefit.

According to DNA Money, the company has been approved by the United Nations Framework Convention on Climate Change (UNFCCC) to receive carbon credits under the project. The company has decided to pass on these credits estimated at Rs.40 million to the farmers and local communities participating in the project. This is expected to generate an additional Rs.5000 per acre in income for farmers.

Besides the efforts by the private sector, central government is also encouraging the extension of forest cover by releasing afforestation funds to States by utilizing a compensatory afforestation fund management and planning authority funds. The guidelines envisage a threetier system involving central as well as state representatives, reported the Economic Times. The Supreme Court’s order will unlock Rs.11200 in funds for compulsory afforestation after a seven-year deadlock. It is hoped that the differences between central and state governments will be resolved soon and afforestation will accelerate.

The Indian Prime Minister’s visit to Malaysia and meetings with Malaysian government officials has cleared obstacles delaying the finalization of free trade agreements among ASEAN countries and it was decided in principle to proceed with a free trade pact. Effective 1 January 2010, the free trade agreements will include 4,000 items on which tariffs will be reduced progressively over a period of six years. The ten members of ASEAN are: Brunei, Singapore, Cambodia, Laos, Indonesia, Malaysia, Myanmar, Philippines, Vietnam and Thailand.

India Sawnwood Prices (domestic)
Indian sawnwood (Ex-mill)
Rs. per ft3
Teak (AD)

Plantation Teak A grade
1800-3250
Plantation Teak B grade
1650-2800
Plantation Teak C grade
900-1350

India Sawnwood Prices
Sawnwood, (Ex-mill) (AD)
Rs. per ft3
Merbau
1500
Balau
1250
Kapur
850
Red Meranti
700
Bilinga
650
Radiata Pine (AD)
350-450
Sawnwood, (Ex-warehouse) (KD)
Rs per ft3
Beechwood
1200
Sycamore
1250
Oakwood
1300
American Walnut
2250
Hemlock clear grade
950
Hemlock AB grade
800
Western Red Cedar
1250

India Plywood Prices
Plywood, (Ex-warehouse)
Rs per ft²
4 mm
20
6 mm
29
12 mm
42
15 mm
51
18 mm
61


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