The All India Notebook Manufacturers Association has submitted a comprehensive representation to the Ministry of Commerce and Industry on an existential crisis threatening the domestic notebook and exercise book manufacturing sector.
A disturbing combination of zero-duty imports from ASEAN countries and structural flaws in the current GST framework is pushing this MSME-dominated industry to the brink of collapse.
The Threat of Destructive Imports and Cascading Tax Burdens while the GST Council’s recent decision to reduce the GST on exercise books and notebooks to a Nil rate was intended to make educational supplies more affordable, it has inadvertently made the tariff structure against domestic manufacturers. Finished notebooks from countries like Indonesia currently enter India completely tax-free, exploiting a 0% Basic Customs Duty under the ASEAN Free Trade Agreement and a similar 0% IGST.
On the contrary, Indian MSME manufacturers are trapped in a cascading tax impact and inverted duty structure. Essential raw materials and auxiliary consumables, such as coated paperboard and packaging, continue to attract 18% GST or 0% with enhanced basic purchase cost in the tune of 1214% because no Input Tax Credit (ITC) can be claimed against an exempt final product by the paper mills. This massive cost disadvantage allows foreign suppliers to effortlessly undercut local producers, threatening the survival of an industry that currently possesses the capacity to meet all domestic demand.
The Association also revealed that the benefits of the 0% GST rate have failed to reach Indian students. Almost immediately after the GST reduction was announced, domestic paper mills unilaterally inflated the basic ex-mill price of paper by 12% to 14% to offset their own ITC losses. This artificial price hike has been entirely absorbed into the manufacturing costs of MSMEs, effectively converting an educational subsidy into enhanced margins for large paper mills.
Urgent Calls to Action
To prevent widespread job losses and the destruction of the domestic manufacturing base, the All India Notebook Manufacturers Association urges the Ministry of Commerce and Industry, the Directorate General of Trade Remedies (DGTR), and the GST Council to implement the following immediate interventions:
A. Imposition of a Minimum Import Price (MIP): Immediately establish an MIP for finished notebooks to check and control ASEAN products, similar to the successful intervention recently deployed for Virgin Multi-layer Paper Board.
B. Initiation of Anti-Dumping Investigations: Direct the DGTR to expedite an investigation into the dumping of notebooks from Indonesia and impose provisional anti-dumping duties to offset the unfair trade advantages currently being exploited.
C. Streamlining of Export Refunds: Amend the CGST Rules to allow exporters of domestically exempt goods to voluntarily pay IGST on export supplies, granting them access to the automated ICEGATE refund system and alleviating the sector’s working capital crisis.
D. Action Against Anti-Profiteering: Initiate an inquiry into the pricing practices of domestic paper mills to ensure the benefits of tax rationalization are passed on to the educational sector. The Association stands ready to work collaboratively with the Government to rectify these anomalies, safeguard millions of jobs and ensure the ‘Make in India’ initiative remains a vibrant reality for the paper stationery sector.