Notebook makers seek Govt aid to avert ‘existential crisis’

The All India Notebook Manufacturers Association has appealed to the government for support to prevent the domestic notebook industry from facing an “existential crisis.”

In its letter to Commerce and Industry Minister Piyush Goyal, the association said the crisis had been triggered by two developments: India’s free trade agreement (FTA) with Southeast Asian countries and the government’s revision of Goods and Services Tax (GST) rates in September 2025.

As a solution, the Association has proposed that the Government introduce a Minimum Import Price (MIP) for notebooks, initiate anti-dumping investigations into notebook imports from Indonesia, streamline export refund mechanisms, and investigate alleged anti-profiteering by domestic paper mills.

It said these measures are essential to aid in the survival of the domestic industry, which it added comprised 1,500 units across the country, and employed 1.25 lakh people.

The cost of free trade

“The most immediate threat to the survival of the domestic notebook manufacturing sector is the import of low-cost finished notebooks from the  Association of Southeast Asian Nations (ASEAN) region,” the association said in its letter, reviewed by The Hindu. 

“The current international trade agreements, coupled with domestic tax rationalisation efforts. has inadvertently constructed a highly asymmetrical trading environment that actively penalises domestic production while incentivising imports,” it added.

Under the current ASEAN FTA, imports of finished paper products, including exercise books, graph books. and laboratory notebooks are permitted to enter the Indian market free of Basic Customs Duty (BCD) from countries such as Indonesia, Thailand, and Malaysia. 

“While Free Trade Agreements are fundamentally designed to foster reciprocal and equitable trade, the specific situation of the global paper industry has allowed Southeast Asian nations, particularly Indonesia, to heavily exploit this specific tariff line,” the letter said. 

It added that Indonesian paper manufacturers benefit from economies of scale, state-subsidised forestry programmes, and highly vertically integrated supply chains that extend from pulp extraction to the final assembly of finished notebooks. 

Good intentions, bad outcomes

“This structural disadvantage was further worsened after the 56th GST Council meeting,” the letter went on to say. “In a well-intentioned effort to support the education sector and reduce the financial burden on students, the Government revised the GST structure for exercise books and notebooks from 12% to a Nil rate (fully exempt).” 

However, as a result of this, the Integrated GST (IGST) on imported notebooks automatically dropped to 0%. 

“This situation has resulted in a disturbing scenario where finished notebooks from Indonesia enter the Indian market completely free of any border tariffs (BCD) or domestic consumption taxes (IGST),” the association lamented. 

It further went on to explain that, while the final assembled notebook is nil-rated, the major raw materials and other inputs required for notebook production such as paper. coated paperboard, specialised adhesives, stitching wire, packaging cartons, and printing inks continue to attract an 18% GST.

This inverted duty structure, where inputs are taxed higher than the finished product, creates a situation where manufacturers cannot claim input tax credits for the tax they pay on their inputs. 

“Therefore, the domestic manufacturer must absorb this 18% tax on consumables as a permanent. unrecoverable cost of production,” the letter said. “This structural anomaly grants foreign suppliers competitive advantage over domestic producers.”