In a significant move that will impact the import and sale of printer cartridges in India, the Government has amended the Finance Bill, which was passed on August 16, 2024. The bill, originally proposed in the budget on July 23, introduces crucial changes to the customs duty structure, affecting imported printer cartridges and toners. The changes will come into effect from October 1, 2024, and bring about a series of amendments, including the reclassification of products and a new 11% basic customs duty.
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Finance Bill 23-24: A New Chapter
The Finance Bill 23-24 aims to realign India’s import and tariff structure in support of the ‘Make in India’ initiative, with printer cartridges and toners now included under a new Harmonized System of Nomenclature (HSN) code.
This update, which changes the classification of printer cartridges from HSN 84439959 (previously classified under “Others”) to HSN 84439951 or HSN 84439952, aims to reduce India’s reliance on imports while promoting domestic manufacturing.
Impact on Importers and Businesses
The introduction of a new 11% basic customs duty, along with a 1% cess on these products, has raised concerns among importers. Previously, these items were duty-free or carried lower taxes. Now, businesses importing printer cartridges, ink cartridges, and toner cartridges will face higher costs, which could potentially be passed on to consumers. However, experts argue that the demand and supply forces in the market will ultimately determine the prices.
The increase in basic customs duty has been met with criticism, with industry experts labeling it as “illogical” and “insensible.” While the government hopes to promote domestic manufacturing, importers are unlikely to see any increase in profit margins.
Government’s Position
According to the government, this change is well within its purview and does not require approval from the World Trade Organization (WTO). The reclassification is merely a change in the product description, which now includes toners alongside ink cartridges, making it a part of India’s broader efforts to streamline its customs and import duties.
The increased duties are expected to disincentivize imports while giving a boost to the local manufacturing sector, particularly as India continues its focus on reducing dependency on imports.
Industry Concerns and Future Outlook
While the government has announced these changes, industry players have expressed concerns over the long-term viability of the increased duties. Printer manufacturers and importers argue that the duty hike could make the Indian market less competitive, especially in the face of technological advancements and price competition from global suppliers.
With the new customs duty set to take effect on October 1, 2024, the government is also prepared to impose penalties on businesses attempting to evade these changes by altering HSN codes. A failure to comply could result in heavy fines, penalties, and even stock audits, making it imperative for businesses to align with the new regulations.
Imaging Solution has interacted with some leading brands, manufacturers and traders in India and took their opinions on how the import duty is going to affect their individual business and the industry as whole. Find below the industry view
Ms. Aarushi Rajpal, Director, ProDot
“Imposition of 11% customs during on imported cartridges is a good move by the Government. This is done to ensure that dumped cartridges don’t come to India from China and cartridge manufacturing here is encouraged and bolstered so that more indigenous brands enter the market. It’s a promising move to safeguard the domestic industry.”
Mr. Rahul Zine Patil, Managing Director, Print It India Pvt Ltd (Brand: Print it)
“Imposition of basic custom duty will be a little support for domestic manufacturing as there many other challenges in manufacturing in India. Domestic cartridge manufacturing has good scope in the long-run because huge local consumption and export opportunities. The duty implementation may encourage the refiller segment and as a result imports of cartridges may decrease to some extent.”
Mr. Shashank Ruiwale, President, Indigo Prints Smart Pvt Ltd (Brand: Formujet)
“The imposition of 11% import duty on cartridges, not on components, is basically aimed at encouraging domestic manufacturing. We have started manufacturing cartridges in India so we see it as a beneficial development. As far as the impact of duty on cartridge prices in the market is concerned, it is only a nominal addition to the existing prices which will get absorbed in the supply chain levels; I don’t think it will make a big impact on demand and supply of cartridges. However, it may encourage the refilling and remanufacturing industries which have shrunk significantly in the last few years.”
Ms. Tanya Goel, VP-Marketing, Aryan Trade World Pvt Ltd (Brand: Aryan)
“From an importer’s perspective, the impact of an 11% customs duty on the imported cartridges can be seen through several lenses: cost structure, competitive landscape, etc. The immediate effect on importers can be a rise in costs due to the additional 11% customs duty. Importers will either have to absorb this cost, reducing their profit margins, or pass it on to customers, potentially leading to higher retail prices. The imposition of the duty could lead to uncertainty in the market. Importers might hesitate to place large orders or invest in inventory, fearing how the market will react to the increased prices. Next, despite the duty, there may still be gaps in the market that local manufacturers cannot fill due to limitations in technology, quality, or production capacity. Aryan importing from the well-established, high-quality international brands may continue to enjoy loyalty from customers who prefer our brand over local alternatives. We can leverage this to maintain our market position.”
Mr. Masood Khan, President, Image Star Pvt Ltd (Brand: Image King)
“The government’s intention behind imposing 11% import duty on imported cartridges is to prevent dumping in India by the foreign manufacturers and to encourage domestic manufacturing which will also give employment opportunities to the local population. In the short-run this duty can increase the prices and cause some distruption, but in the long-run it will benefit the economy and the country. IMAGE KING wholeheartedly supports this initiative and the government’s efforts towards building a stronger self-reliant India.”
Mr. Rishikesh Awasthi, Chief Operation Officer, JIT Enterprises (Brand: JIT)
“If the 11% customs duty is implemented, then it will push up the prices of imported cartridges by around 20%. That will encourage users to refill their compatible cartridges and also get their OEM cartridges remanufactured. So the import duty will revive the refilling and remanufacturing industry. This will also encourage more people to start domestic manufacturing of cartridges. From my side, I fully support this initiative.”
Mr. Garuav Khetterpal, MD, Growlam Office Pvt Ltd (Brand: Growlam)
“I think the imposition of 11% import duty will only push the prices without any benefit, because there are very few domestic cartridge manufacturers in India and they cannot provide the cartridges need for all the different printer models of different brands and also they cannot meet the huge domestic demand. They could provide only for limited models and their quality is not up to the imported cartridges. The ecosystem has to be developed and there should be more domestic manufacturers of these cartridges, then only such anti-dumping measures could be beneficial to the industry and to the consumers.”
Mr. Aniket Patel, Director, Multi Infomedia Pvt Ltd (Brand: i-jet)
“The 11% duty on the imported cartridges is a good step forwards. As the cost of compatible cartridges increase, it will increase the demand for toners, reman services, refilling aids and cartridge parts. So far, all the industry players like brands and remanufacturers and refillers due to the low margins are unable to survive in the market. This increase in duty will likely revive the reman and refilling industry.”
Mr. Tarun Gupta, Proprietor, Goel Imports (Brand: Gi2)
“I don’t think this import duty of 11% is going to have a significant impact on the market; prices of compatible cartridges may go up a little bit, otherwise there will be little change in demand and supply. Because there is no duty on components, this step might give a push to the refilling and remanufacturing industry.”
Mr. Yogesh Agrawal, Co-Founder, Consistent Infosystems Pvt Ltd (Brand: Consistent)
“In my opinion, the imposition of 11% import duty by the government is not a positive step, because there only a few cartridge manufacturers in India and they cannot meet the huge domestic demand. Currently, 98% cartridges are imported; now a duty of 11% will be added to all these cartridges. So the overall impact will only be negative both on the customers and the partners.”
Mr. Sanjeev Chaudhary, Proprietor, Delco Copier (Brand: Delco)
“Because we have only a few domestic cartridge manufacturers in India, imposition of 11% duty on cartridges will only push up prices and ultimately the end customer will bear the brunt. There are very few domestic cartridge manufacturers in India. Before imposing such duties, the govt should develop the necessary manufacturing ecosystem for cartridges, which is currently absent in India.”
Mr. Akshay Kamdar, Director, Atul Automation (P) Ltd (Brand: Excelam)
“I think imposition of customs duty is a good step, though it will push up prices in the short run. Then only people will start manufacturing in India. Imposing customs duty will boost the economy and local employment.”
Mr. Navin Thirani, CEO, Copian International (Brand: Copian)
“The imposition of the duty might help the local cartridge manufacturers to some extent, but for importers surely nothing will change; the demand will be the same. I don’t find any significant impact of this measure. Refilling and remanufacturing industry may get a boost but not much.”
Mr. Manoj Pandya, Proprietor, Circuit Systems (Brand: CS Plus)
“As such I don’t think this 11% import duty on cartridges has much impact on us. However, we hope there will be more demand for refilling and cartridge parts, because the increase in cartridge prices can encourage users towards refilling and remanufacturing. We have to wait and see.”
Mr. Lalit Kumar Rakhecha, Founder, Softline Sales Corporations
“The total custom duty will be approximately 12.5 %. This will act as a small barrier for flooding of imported compatible toner cartridges in India. At present Remanufacturing is almost stopped in India as it is not beneficial as the compatible cartridges are available at low prices due to cut-throat competition among importers. I think government should recover the EPR cost at the time of import from the importer. They should also fix minimum price at which a cartridge can be imported in India otherwise lot of under invoicing will be took place.”
Mr. Umesh Aggarwal, Founder, Prefil System (Brand: Printon)
“The 11% import duty on compatible cartridges will boost Make In India but will not have much impact on prices. But if the price of compatible cartridge increases by significantly from the previous price then it will help in the revival of refilling.”
Conclusion
The changes brought by the Finance Bill 23-24 mark a significant shift in India’s customs duty structure, particularly in the electronics and printing sectors. The increase in basic customs duty on printer cartridges aims to promote the ‘Make in India’ initiative but has sparked debates about its impact on profits, consumer prices, and the broader business environment.
As the new duty structure comes into effect on October 1, 2024, industry players will have to navigate these changes, with compliance being key to avoiding penalties.
Covered By: Imaging Solution / Printer Cartridges
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