Paper Industry Cautions Consumers About Price Surge After GST Rate Increase

The Indian paper industry has raised concerns over a recent Goods and Services Tax (GST) hike on paper and paperboard from 12% to 18%, warning that it will lead to higher consumer prices and strain micro, small, and medium enterprises (MSMEs). The Indian Paper Manufacturers Association (IPMA) described the decision as regressive, arguing that it contradicts the government's stance that only non-essential items should face higher tax rates. The increase is expected to affect sectors reliant on paper, including education, packaging, and fast-moving consumer goods (FMCG).

The IPMA emphasized that paper is a necessity, integral to education, literacy, and eco-friendly packaging. “We expected paper to be taxed at 5%, but the hike to 18% will have far-reaching adverse consequences,” said IPMA President Pawan Agarwal. The increased GST is likely to drive up costs for essential goods, such as food, pharmaceuticals, and hygiene products, which rely heavily on paper-based packaging. This cost-push effect could result in higher prices for consumers across multiple sectors, further straining household budgets amid inflationary pressures.

An inverted duty structure exacerbates the issue, as the GST on paper-based products like boxes, cartons, and bags has been reduced to 5%, while the primary raw material—paper and paperboard—now faces an 18% tax. With nearly 90% of kraft and packaging paper used in such products, this discrepancy is expected to lock up over ₹500 crore in working capital, particularly impacting MSMEs. These businesses, which form the backbone of India’s packaging sector, may face operational disruptions and complex refund processes due to the tax imbalance.

Also Read: Tax Relief for Millions as Income Tax Audit Deadline Extended to October 31

The IPMA has urged the government to reconsider the GST hike, aligning with Prime Minister Narendra Modi’s vision of taxing only non-essential items at higher rates. “We appeal for an urgent review to protect consumers, MSMEs, and the long-term health of the Indian paper industry,” Agarwal stated. Without intervention, the industry warns of significant economic ripple effects, potentially undermining India’s push for sustainable packaging and affordable education materials.

Also Read: Horror on Agra-Etawah Highway as Auto Slams Truck Killing Two Women and Injuring Six