The Indian paper industry is raising alarms about a potential flood of paper imports after recent changes to the Goods and Services Tax (GST). Experts warn this could hurt local businesses and weaken the government’s goal of promoting local manufacturing through the ‘Make in India’ initiative.
Pawan Agarwal, President of the Indian Paper Manufacturers Association (IPMA), highlighted serious concerns. He noted that while local manufacturers face rising production costs, imported paper for items like exercise books will now come into India without any tax. This situation could undermine the competitive edge of Indian producers.
Recent statistics show that paper imports into India have already doubled over the last four years, increasing at a rate of more than 17% annually. According to IPMA data, imports soared from 1.08 million tonnes in FY2021 to 2.06 million tonnes by FY2025, valued at nearly ₹15,000 crore.
The new GST rules fully exempt uncoated paper used for educational purposes from tax. This means foreign suppliers can import paper without paying any Integrated GST (IGST). Meanwhile, Indian manufacturers, who can no longer claim input tax credits on their production, will see their costs rise. This creates a significant price gap, making imported paper much cheaper than what’s made domestically.
As a result, producers of notebooks and textbooks fear production costs may increase by 3-5% for notebooks and over 6% for printed textbooks. This could ultimately lead to higher prices for consumers, affecting families and the education sector.
Experts from various fields, such as finance and education, suggest that the long-term impact of these changes could be quite serious. Education advocates argue that pricing pressure in the paper industry may lead to increased costs for school supplies, which places an unnecessary burden on students and parents alike.
With these concerns, it’s crucial to watch the trends in paper imports and manufacturing closely. The balance between supporting local industries and ensuring competitive pricing is delicate, and governments must navigate this carefully to protect local jobs and production.
For more on the impact of GST on local industries, you can refer to this government report.
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INDIAN PAPER INDUSTRY, PAPER IMPORTS, GST, GST REFORMS MAY TRIGGER SURGE IN PAPER IMPORTS, WARNS INDUSTRY BODY
