Timber demand droped by 40% after GST tax system implementation in India

The Economic Times reported 40% decrease of the demand for timber and timber products including plywood and laminate after the implementation of Goods and Services Tax (GST) earlier this month. According to the announcement, while monsoon is the lean season for timber merchants as demand usually dips, industry players say that it has further plunged this year, against the same period last year. The decline in demand is mainly driven by increase in price of timber as well as plywood.

After implementation of GST, the tax on plywood accounts for 28%. At the same time, there is a significant difference between the tax rates of timber products.

Earlier, the local analysts expected that roll-out of GST would boost sales of the leading wood-related products manufacturers to the Indian domestic market. Currently, 60-65% of almost USD 4 billion plywood market in India is contributed by such a called “unorganised sector” players. The latter means a sector represented by numerous small, non-transparent players, which often do not follow standard regulations providing poor quality at lowest price.

Earlier Indian paper producer NEPA informed about an investment into upgrade of two paper machines.

Source: Woodbizforum