GST Rate Cut On Paper Becomes Detrimental For Paper Industry

Indian Paper Industry has raised serious concern over the potential surge in paper imports following the recent GST reforms.

Paper imports into India had doubled in the last four years in volume terms. According to data from the Department of Commerce, imports of paper and paperboard rose from 1.08 million tonnes in FY21 to 2.06 million tonnes in FY25. In value terms, imports have risen to nearly Rs 15,000 crore.

Under the revised GST structure, uncoated paper used for exercise books and notebooks has been exempted from GST, and consequently, the Integrated GST (IGST) on imports of such paper has also been reduced to nil. As a result, foreign exporters will pay no IGST, while Indian manufacturers, now ineligible for input tax credit (ITC) due to exempted GST on the final product, will have to absorb the embedded input tax in their cost structure. This, according to IPMA, creates a sharp price differential that will make imported paper substantially cheaper than domestic production.

Domestic manufacturers of notebooks and textbooks, who can no longer avail ITC, will see production costs rise by 3–5 per cent for notebooks and over 6 per cent for printed and textbooks.

“With the recent GST changes, India risks becoming a further dumping ground for cheaper paper from abroad,” said Pawan Agarwal, President, Indian Paper Manufacturers Association (IPMA). “While domestic manufacturers are being burdened with higher input costs, imported paper used for exercise books and notebooks will now enter the country completely tax-free. This will distort market dynamics and deal a blow to Indian producers.”

China and ASEAN countries are already major sources of paper imports into India. In FY25 alone, imports from China surged by 33 per cent, and accounted for 27 per cent of India’s total paper and paperboard imports, while ASEAN nations contributed another 20 per cent.