What's Happening?
Recent changes to India's Goods and Services Tax (GST) have created an inverted duty structure, posing a threat to over 20,000 small packaging businesses. The tax rate on corrugated paperboard boxes has been reduced, while rates on raw materials like kraft paper have increased, leading to financial strain on micro, small, and medium enterprises (MSMEs). The Eastern India Corrugated Box Manufacturers Association warns that this could lead to closures and increased costs for consumers.
Why It's Important?
The GST revisions could significantly impact India's packaging industry, which is crucial for sectors like e-commerce and pharmaceuticals. The financial strain on MSMEs may lead to increased box prices, affecting supply chains and consumer costs. The situation underscores the importance of balanced tax policies to support small businesses and maintain industry stability.
What's Next?
Industry groups are urging the government to restore GST rate parity to prevent closures and support MSMEs. Addressing the tax imbalance is seen as vital for sustaining the packaging sector and its role in essential supply chains. The government may need to consider adjustments to ensure the viability of small businesses and protect employment in the industry.
