GST reforms may trigger surge in paper imports, warns industry

The Indian Paper Industry has raised serious concerns over the potential surge in paper imports following the recent GST reforms, warning that the move could erode domestic competitiveness and undermine the government’s flagship Make in India initiative.

Paper imports into India have already doubled in the last four years, growing at a CAGR of over 17% in volume terms — one of the steepest among major commodities. 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, touching nearly INR 15,000-crore in value terms. The industry now fears that this rising trend could turn into a deluge because of the GST changes.

“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.”

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.

The association added that domestic manufacturers of notebooks and textbooks, who can no longer avail ITC, will see production costs rise by 3–5% for notebooks and over 6% for printed textbooks, ultimately burdening school children and the education sector.

China and ASEAN countries are already major sources of paper imports into India. In FY25 alone, imports from China surged by 33%, accounting for 27% of India’s total paper and paperboard imports, while ASEAN nations contributed another 20%. IPMA warned that under the new GST regime, these volumes are likely to rise sharply as foreign suppliers exploit the tax advantage to flood the Indian market.

“The Indian Paper Industry is already under pressure from predatory imports arriving at preferential or zero import duty,” said Agarwal. “The latest GST changes will worsen this imbalance, hurt domestic producers and run counter to the government’s objectives of Aatmanirbhar Bharat and Make in India. We urge the government to urgently review the policy before irreversible damage is done to this vital sector.”