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Mumbai (Maharashtra) [India], October 3:<\/b> GST 2.0 aimed to simplify taxation and support education. But India\u2019s notebook manufacturers now face rising costs, blocked tax credits, and tougher competition from imports.<\/span><\/p>\n The rollout of GST 2.0 was welcomed by industry as a bold reform designed to streamline taxation and reduce compliance burdens. For education-related goods, the government made a significant move: setting the GST rate on notebooks at <\/span>0%<\/b>.<\/span><\/p>\n The intention was straightforward: make learning more affordable. Yet, the notebook manufacturing sector is experiencing unforeseen challenges as a result.<\/span><\/p>\n Under the <\/span>ASEAN<\/a><\/strong> Free Trade Agreement<\/b>, imports from Indonesia, Thailand, and Malaysia already arrive in India at <\/span>0% customs duty<\/b>. With GST 2.0 setting notebook GST at 0%, these imports now attract <\/span>no IGST either<\/b>.<\/span><\/p>\n The outcome: imported notebooks can land in India completely tax-free; domestic notebooks, by contrast, face production costs inflated by input taxes.<\/span><\/p>\n Notebook manufacturing relies heavily on raw materials, including coated paperboard, packaging films, adhesives, and wires. These inputs attract <\/span>18% GST<\/b>.<\/span><\/p>\n Previously, Indian notebook makers could balance this by claiming <\/span>input tax credit (ITC)<\/b>. But with final notebooks taxed at 0%, there is no ITC mechanism available. This leaves manufacturers bearing the full burden of GST on raw materials.<\/span><\/p>\n This tax mismatch has become the central concern for domestic producers.<\/span><\/p>\n While the GST reduction was expected to lower notebook prices for students, the opposite trend is visible in the market. Prices are climbing, mainly because manufacturers must absorb higher raw material costs without the benefit of ITC relief.<\/span><\/p>\n Cheaper imports from ASEAN countries add another layer of pressure, creating a dual challenge for India\u2019s small and medium notebook makers.<\/span><\/p>\n The notebook sector is dominated by <\/span>MSMEs<\/b> across India, many located in semi-urban and rural areas. These businesses are typically labour-intensive, employing hundreds of thousands of workers, often women and youth.<\/span><\/p>\n Higher costs, blocked ITC, and import competition threaten their viability. If left unaddressed, the consequences could include:<\/span><\/p>\n Indonesia is the world\u2019s largest producer of paper and paper products. With duty-free access under ASEAN agreements, its exports pose a substantial competitive threat to India\u2019s local players.<\/span><\/p>\n For domestic producers, the concern is not about efficiency or productivity. India already has sufficient capacity to meet its own notebook demand. The issue is purely cost competitiveness under the current tax regime.<\/span><\/p>\nReform with Unintended Consequences<\/b><\/h3>\n
Imports Gain an Edge<\/b><\/h3>\n
The Input Credit Blockage<\/b><\/h3>\n
Rising Costs vs Flat Prices<\/b><\/h3>\n
Small-Scale Industry at Risk<\/b><\/h3>\n
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Imports from Indonesia: A Case in Point<\/b><\/h3>\n
Industry\u2019s Representation to Government<\/b><\/h3>\n