GST reforms may spur paper import surge, Industry warns

INDIA – The Indian paper industry has sounded the alarm over the potential surge in paper imports following recent Goods and Services Tax (GST) reforms, warning that the changes could weaken domestic competitiveness and undermine the government’s flagship “Make in India” program.

According to the Indian Paper Manufacturers Association (IPMA), paper imports have already doubled over the past four years, growing at a compound annual rate of more than 17%.

Department of Commerce data shows that imports of paper and paperboard rose from 1.08 million tonnes in FY21 to 2.06 million tonnes in FY25, valued at nearly ₹15,000 crore. Industry leaders fear that this rising trajectory could accelerate sharply due to the new GST structure.

“With the recent GST changes, India risks becoming a dumping ground for cheaper paper from abroad,” said Pawan Agarwal, President of 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.”

Under the revised GST regime, uncoated paper used for exercise books and notebooks has been exempted from GST, effectively reducing the Integrated GST (IGST) on imports of such paper to nil.

As a result, foreign exporters will pay no IGST, while domestic producers, now ineligible for input tax credit (ITC) due to the exemption, must absorb the embedded tax costs in their operations.

IPMA estimates this will make imported paper significantly cheaper, creating a steep competitive imbalance.

The association warned that notebook and textbook producers unable to claim ITC could face cost increases of 3–5% for notebooks and more than 6% for printed and bound textbooks, ultimately passing the burden to consumers in the education sector.

Imports from China and ASEAN countries already dominate the Indian market. In FY25, Chinese paper imports surged 33%, accounting for 27% of total volumes, while ASEAN countries contributed another 20%.

IPMA cautioned that the latest tax changes could prompt a flood of low-cost imports, further straining domestic mills.

“The Indian paper industry is already under pressure from predatory imports at preferential or zero duties,” Agarwal added.

“The latest GST reforms worsen this imbalance and run counter to the goals of Aatmanirbhar Bharat. We urge the government to review the policy urgently before irreversible damage is done to this vital sector.”

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