PROPOSAL FOR THE UNION BUDGET 2024-25

Federation of Indian Plywood & Panel Industry

Dear Sir,

We refer to your e-mail letter No.OEA-12026(14)/1/2023-TFP dated 10/10/2023 requesting for Proposals for the Union Budget 2024-25

Indian Plywood & Panel Industry, as on date, consists of around 3,300 units (small, medium and large units), supporting around 1 million livelihoods directly and almost same number indirectly. Market size of Indian Plywood and Panel industry is 25,000 Crore INR (approx). In the last five years, the segment witnessed a CAGR of 6-7% Almost 92% of the total wood used as raw materials by these industries is sourced from Trees Outside Forest/Agro-forestry farm land. An estimated 10 lakhs farmers are engaged in TOF plantations for supply of raw material to Plywood, Paper and Wood Panel Industries. To sustain this Agro-Forestry drive in India, the Government has to make sure that they are integrated with wood based industries. The wood based industries viz. veneering, sawmilling, Plywood, MDF & timber are sustained by supporting farmers and other marginal stakeholders to get remunerative prices for their produce.

The Central Government has taken certain decisive measures to reduce the housing shortage in the country, which at present is estimated at around 50 million units. The Central Government’s policies – “Pradhan Mantri Awas Yojana”, to ensure ‘Housing for all by 2024, and establishment of 100 smart cities. This will not only revive the Housing & Real Estate Sector in India, but will also lead to massive increase in demand for wood based panel products. This will boost establishment of many more new Plywood & Panel mfg. units, such as Medium Density Fibre Boards (MDF), Particle Boards and Pambeo-based Composites, in the near future. The industry therefore needs to be supported in a big way, not only by promoting Agro-Forestry to ensure availability of their wood requirements on a sustainable basis, but also by relaxing/liberalizing the Licensing / Permits requirements for transportation and processing of Agro-Forestry Timber.

Policy Issues:

Unfortunately, Government as such has not made any action plan or policy for the sustainable development of Wood & Pane’, Industry in the country. The current Licensing Norms and Transport Permits, especially for setting up of Agro-Forestry Timber based Units, and on movement of AgroForestry Timber is a serious dampener to this Industry. Implementation of credible forest certification of forests and plantations. Miss-match between Quality and species of wood required for production and manufacturing and production under forests/FDC and agroforestry systems.

Request for consideration (Policy Issues):

• Constitution of National Council for wood and wood products under Ministry of commerce & Industry on the line of Paper council.(Proposal submitted, copy attached) This will help in convergence of sectorial and inter-ministerial assistance; easing of regulatory requirements.
• No licensing for veneers, plywood, Medium Density Fiber (MDF) boards, particle boards, pulp and paper and industries that primarily use ‘farm wood’ or ‘Imported wood’ as raw material.
• Developing a Timber use Policy in India. A separate legal framework (Growing of Trees outside Forests (Promotion and Facilitation) Act) needed.
• Allow 5-10% of forest areas on lease for raising medium (MRT) and long rotation trees (LRT).
• Tree Plantations program may be financed through Public Private Partnership (PPP).
• Forest corporations may shift from growing short rotation trees (SRT) to MRT & LRT.
• Need for constituting a committee to decide about quality and lease rate of forest lands to be leased to forest corporations, plantation companies & industries and required incentives like discounted loans, capital subsidies and tax concession.

While Agroforestry is fast gaining acceptance, the need of the hour is that more and more Agroforestry Timber based industries processing units come up in the country. While on one hand, Agroforestry Plantations increase the Forest Green cover in the country, it also supplements income of Farmers, reduces their dependence on Govt of sale of traditional cash crops, the Agro-Forestry Timber based industries processing units, which are generally set up in near vicinity of plantation will provide employment opportunity in rural areas, reduce migration to urban areas, thereby leading to overall balanced growth. With abundant availability of Plywood and Other Panel Products such as MDF, PB, it will further pave the way for development of Organized Furniture Mfg. Units within the country, thereby reducing imports of furniture and saving precious foreign exchange. Agro-forestry and farm forestry have taken deep roots in the country. These Trees outside Forests (Tof) are contributing to the increase in country’s forest cover and are enhancing ecosystem, besides meeting bulk of the country’s demand for wood. Most importantly, agro-forestry is providing a steady and climate resilient income to the farmers. Thus, promoting use of wood obtained from sustainably managed forestry would play a significant role in mitigating climate change and ensuring sustainable living.

Request for consideration (Reduction on import duty):

1. For availability of good girth round logs to meet the requirement of our saw milling, veneering & furniture grade sawn timber our country is still dependent totally on imported wood. Till country forest wood is able to substitute Imported timber and produce saw quality logs from long rotation plantation timber it is requested to consider reducing Import duty zero for products ITC (HS) code falling under 4403 & 4407.
2. Consider allowing duty free import of ITC (HS) code falling under 4408 as this is required for face veneer which determines the quality of the finished plywood products. In India the short rotation plantation timbers are unfit for producing good quality face veneer. As on date country is totally dependent on imports. It is therefore requested to reduce the duty zero.
3. To safe guard the interest of particle board & MFD manufacturers of Indian industries and minimize import of other similar finished products it is proposed to increase import duty against ITC(HS) code 4410-4421 from 10% to 25-30 percent.