Budget 2020: Here's why drop in customs duty on import of newsprint to 5% is a relief for print media

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The announcement of slashing customs duty on import of newsprint from 10 percent to five percent in the Union Budget 2020 comes as a big relief for the newspaper industry that has been reeling under pressure.

The uncoated paper used for newspapers and lightweight coated paper for magazines will now attract five percent instead of 10 percent that came into effect from July 6, 2019.

In India, the total consumption of newsprint is estimated at 2.5 million tonnes per annum. The capacity of the domestic industry is one million tonnes. As for domestic manufacturers of uncoated and lightweight coated paper, there are none.

The reduction in import duty on newsprint is positive for the print media space because of the lukewarm growth in print circulation, slow growth in ad revenues, and readers moving to online news websites.

A look at advertising revenues and ad volumes in print in 2018 shows the slow growth of the sector.

According to an EY 2019 report, advertising revenues in print grew 0.4 percent in 2018. Newspaper advertising grew one percent while magazine advertising fell by eight percent.

The fall in advertising was due to both reduced ad volumes as well as pressure on effective rates.

Ad volumes in print fell one percent in 2018 compared to 2017.

The share of spending towards print advertising has also seen a downward trend. The share of money spent on advertising in the print media of the total spending in 2016 was 31.4 percent which came down to 29 percent in 2017, according to a GroupM report.

In 2018, circulation revenues grew marginally by 1.2 percent to reach Rs 88.3 billion due to low growth in overall newspaper paid circulation numbers, static or marginal increases in cover prices, and a 15 percent fall in magazine circulation revenues.

In terms of overall growth, the print media remained static in 2018 as it grew at 0.7 percent to reach Rs 30,550 crore, according to the Ficci-EY media and entertainment industry report 2019.