Voicing concern over the rise in paper imports after the GST reforms, Indian Paper Industry has warned that the move could erode domestic competitiveness and undermine the government’s flagship “Make in India” initiative.
Paper imports have already doubled in the last four years, growing at a CAGR of over 17 per cent in volume terms. Commerce department data shows that imports of paper and paperboard rose from 1.08 million tonnes in FY21 to 2.06 million tonnes in FY25, touching nearly ₹15,000 crore in value terms. The industry 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. 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, he said.
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 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, 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 per cent, accounting for 27 per cent of India’s total paper and paperboard imports, while ASEAN nations contributed another 20 per cent. 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.
Published on October 21, 2025