In a letter to the Prime Minister of India, the industry body for Corrugated Paper Packaging Sector – Indian Corrugated Case Manufacturers’ Association (ICCMA) has requested for parity of GST Rates in Corrugated Paper Packaging Sector. Welcoming the GST 2.0 decision to reduce GST on Corrugated Paper Boxes (Chapter 4819) from 12% to 5%, the ICCMA has expressed deep concern on the GST increase from 12% to 18% on the principal raw material – Kraft Paper (Chapter 4804 & 4805). Indicating another disparity, the letter says that Corrugated Paper Board (Chapter 4808) has also suffered from an increase of GST from 12% to 18%.
Apprising of the industry’s situation, the letter says that the Corrugated Paper Packaging Industry is spread across the country with about 7,000 semi-automatic units and 600 automatic plants, directly employing over 1 million people. It is a 100% MSME owner driven sector, converting nearly 7 million tons of Kraft Paper into corrugated packaging every year. The rate cut for Corrugated Paper Boxes has been appreciated as a progressive step supporting the MSME sector and consequently helping reduce the overall cost of secondary packaging across the supply chain.
The disparity has allegedly created an inverted duty structure with a huge 13 % differential, is contrary to the vision of supporting MSMEs, and will lead to:
- Severe working capital blockage due to higher input tax outgo
- Cumbersome refund procedures and additional paperwork, which are extremely challenging for owner-driven MSMEs.
- Ambiguity and misinterpretation arising from keeping Chapters 4808 & 4819 at different GST rates.
- Discouragement of automation and expansion, as the inverted structure will not allow Input Credit on Capital Goods GST – creating barriers for new investments and limiting India’s ability to deliver worldclass packaging for exports.
Historically, Kraft Paper and Corrugated Packaging have always been kept at duty parity, ensuring balance and ease of operations. The ICCMA has requested the PMO’s timely intervention to:
- Maintain GST parity across Chapters 4804, 4805, 4808, and 4819 to avoid inverted duty structures and ambiguity.
- Relieve MSMEs from onerous compliance and refund processes, which drain time and resources from owner-driven businesses.
This support will bring immense relief to thousands of converters across India and ensure the continued growth, modernization, and global competitiveness of this vital MSME-driven sector.
