https://dailyasianage.com/news/128207/problems-of-ink-industry-in-bangladesh
EDEN BUILDING TO STOCK EXCHANGE Published: 01 July 2018
Problems of ink industry in Bangladesh M S Siddiqui The ink industry in Bangladesh is at primitive stage with production capacity of about 800mt /month by about 40 small and Cottage Industries (SMEs). The journey of ink industry started with lone industry in east while East Pakistan. After liberation, few entrepreneurs started ink industries.
This is a cottage type technology based industry with low cost locally made equipment. At present about 40 industries are meeting the one third i. e. about 400 mt of the demands of 2,200 mt /month.
The market size is about Tk760 crore of the local manufacturer and share of import is 1,500 crore. These quantities of demand are met by import mostly from India and also China and other countries.
The demand for ink increased many fold with economic development and change of choice of consumers for good packaging of consumers goods. The annual growth rate is about 20 percent. It is also interlinked to printing and packaging industries as they are buyer of ink for use in printing of various products and papers.
Ink is made of Resin, Drying oil, Solvents, pigments, and different specialty additives. All these raw materials are imported. The taxes on these raw materials are from 5 percent to 25 percent. Local manufacturers are sharing the market with price and quality. This import substitute industry is gradually taking over the market from overseas exporters.
Printing inks are broadly distinguished by the printing process in which they are used. The application of ink in wrapping papers, magazines, food packaging, furniture laminates, postcards, wall paper, paneling and greeting cards. The food packaging is the emerging market with the economic development and purchasing power of middle class consumers.
The quality and appearance of processed food demand leading to rising demand of quality printed packaging materials. These packages are used for dry food items, washing powders/detergents, non-food items, pharmaceuticals, cosmetics, chemicals. Its usage extends further to various niche applications such as UV light and moisture resistant based on different printing needs.
UV cured inks are used for non-food products packaging such as for tobacco products. Due to consciousness of health and hygienic packaging of food, the demand for water based and UV-cured printing inks owing to its compliance with environmental regulations is anticipated to drive gravure printing ink market growth over the forecast period. Bangladesh market yet to go for water based ink due to lack of awareness and poor environmental regulations.
There are many types of inks. Letterpress and lithographic inks are known as paste inks and are of higher viscosity than the flexographic and gravure inks, which are called liquid inks.
Flexographic ink used for poly bag for garments and other industries such as cement packaging, Gravure, news print (web) and Sheet fed offset Ink.
Flexographic printing occurs directly from raised surface like letterpress printing, Offset rotary printing employs flexible printing plates that are usually made of photopolymer and relatively fluid inks. The primary application is the printing of newspaper, books, packaging materials made from plastics, paper, cardboard and paperboard and metallized packaging.
Gravure printing is a generic term for printing processes in which lines, dots or flat recess cells on a bare metal surface are filled with ink, which is absorbed by a substrate in contact with the surface.
The surplus ink is removed prior to the contact with the material for printing, such that only the recess cells transfer the ink. This printing process requires special binders, which must wet the colorant, envelop it and transfer it via the inking system and the printing plate to the substrate. They must also fix the pigments on the substrate and ensure that the print is durable.
Transfer printing is a technique for printing different materials with the help of transfer papers and film. The transfer papers are printed with sublimation inks (side-inverted), and applied by a thermal transfer printing press to the article for printing.
Offset printing is an indirect, flat-screen printing process that is widely employed for books, newspapers and packaging. It works by exploiting differences in wetting behavior of different materials.Gravure ink is used to print on polyester sheets of different types- PP, LDPE, HDPE. LLDP, BOP.
The packaging industries who are supplying packaging materials to export oriented garment industries got duty free bond license from NBR and they can import duty free and some of them got excess import license and sell ink in the market and create challenge for local manufacturers. The member of their association is reportedly 1,300.
The printing and packaging industries prefer to import from other country due to advantage of better import with undue practice of under-invoice of value casing uneven competition for local ink manufacturers.
Recently, Bangladesh Tariff Commission took the matter in consideration and had consultative meeting with respective stakeholders and government departments.
Upon consultation Commission has written to Ministry of Finance and NBR to fix tariff value for various grades of ink to minimize tax evasion and fair completion in the ink market. The suggestion of Tariff Commission is advisory and mandatory for NBR.
The current budget and recent SRO of NBR created more complex situation for the ink sector. The Honorable Finance Minister in his budget speech on 7 June said that - in order to encourage Printing Industries, the budget proposed to reduce customs duty from 25 percent to 10 percent of "Flexo Gravure in liquid form".
The wordings of "Flexo Gravure in liquid form" are confusing and there may be typing mistake as this has been referred to Flexo and Gravure ink. The budget also increases the tax on printed materials to support the packaging industries and attempted to reduce tax on ink through SRO. It seems the government wants to promote printing and packaging industry at the cost of ink industries.
Before the presentation of budget in the Parliament on 7June, NBR issued a SRO no: 148Ain/2018/14/customs dated 29 May 2018 has revised the customs duty of Flex and Gravure Ink from 25 percent to 10 percent. On the other hand, the first schedule of Finance Act 2018 showed the custom duty on ink as 25 percent.
The schedule has another confusing point at page no: 6237. Under the H S Code 3215.19.10 has description of goods: 'Flexo/Gravure in liquid form imported by VAT registered manufacturer'.
There is no opportunity of import by any company without VAT registration. Moreover, there is no name of any specific of product manufacturer for whom NBR has given tax benefit.
According to first schedule and SRO, someone will get the duty benefit but without specific name of sector has created confusion. NBR should clarify the SRO and first schedule of Finance act and protect the ink sector in the interest of the growth of a promising sector.
By this time Japanese Toka set up a joint venture in Bangladesh and another famous Japanese Ink company Messrs Sakata Corporation is in process of setting up their plant in Bangladesh. This is foreign direct investment (FDI) in this sector. Bangladesh is hungry for FDI and this investment is good news for Bangladesh.
At reduction of tax on imported ink may give a wrong signal to overseas investors and have bad impact on this emerging sector. NBR also should fix the tariff value of ink to stop evasion of tax and maintain the import tax of 25 percent on ink and create level playing field for local manufacturers.
The writer is a legal economist. mssiddiqui2035@gmail.com