In our editorial in this magazine last month, we wrote that Indian publishing and print businesses are quite used to various types of disruptions and periodic setbacks, which, to some extent, make them resilient. However, while one disruption or two can be handled by relying on savings of some sort or by sacrificing profitability in the near future, when several problems arise simultaneously, sentiment, emotional resilience, and even the inherent strength of a large and growing economy are not enough. I suppose this is what television pundits call “a perfect storm.”
Now, the disruption and oil, gas, and chemical shortages caused by the US-Israeli war against Iran are being compounded with several of our geopolitical and economic development issues. The effects of sanctions, reciprocal tariffs, and the Israel-US war on Iran go beyond the price of oil. Previous and ongoing sanctions and wars, such as the Russia-Ukraine war, have already led to high energy and steel prices. Printing equipment manufacturers are increasingly not just thinking of manufacturing armaments but also signing joint ventures to do this.
Our newspaper industry seems to be stuck with minimal growth in ad revenues and turnover, simply by decreasing circulation, pages, and raw material costs, and by charging more for some premiumization of ad positions. Within this almost no-growth scenario, some of the big news organizations are cannibalizing the ad revenue of regional language dailies by heavily discounting their rates for premium positions and jacket ads.
While this may or may not erode printed news media’s credibility further, the current sanctions and shipping surcharges are bound to raise the price of newsprint. Apart from the cyclical stiffness in imported newsprint prices the sanction and logistics charges have risen from US$ 50 a ton to US$ 125 a ton. In addition, Russian newsprint and ships have to pay an additional US$ 25 per ton for ‘scuba diving charges’ apparently to ensure that no bombs are attached to the hull underwater. Some other consumables are also in short supply as the number of suppliers decreases. Oil-based inks and chemical prices have also risen more drastically than newsprint and paper.
For commercial and book printers, paper prices have risen considerably over the past two months. Some commercial printers and book exporters are operating on the hope that the latest war is a short-term event and that their project-by-project pricing will keep up with the inflationary trend. Since they are competing globally, they feel compelled to absorb domestic conditions and challenges. The minimum price of Rs 67,000 per metric ton at which paper can be imported has led to an increase in those prices, in addition to the war-related shipping surcharge of Euro 10 to 25 per ton.
Simultaneously, either because of energy or raw material inputs, domestically produced uncoated paper and coated paper prices have risen by approximately 9 and 10% in the past couple of months. Nevertheless, since the local textbook season is at its tail end, there is a calm period in which printers hope that there will be a modicum of peace and relief, if not an end to the war(s).
We learn that the shortage of natural gas, even at double the prices, is affecting more printers who use this type of energy in their heatset presses and their binding departments. As I wrote last month, for book-printing exporters, there is also a significant rise in the cost of air-freighting books, with fewer cargo-bearing flights that normally transit the Middle East.
As we also wrote previously, we need more self-sufficiency in energy since it seems that no matter how high our per capita income or GDP, the cost of imported inputs for the energy sector remains at 4.8% to 5% of the GDP. This may rise significantly as every US$ 10 rise in oil prices will add US$ 15 to 18 billion to our imports, even as the Rupee devalues.
The current inflationary situation, together with other structural economic problems, has already led to an abrupt increase in minimum wages in several states. Gradual increases over time, accompanied by improvement in skilling and productivity, would have been digestible by our industry. However, we realize that this is one more item added to our list of wishful thinking and hope.
