The recent hike in Goods and Services Tax (GST) rates on corrugated boxes has raised significant alarm within the packaging sector, with manufacturers warning that this change could lead to numerous closures of businesses. Industry representatives are urgently calling for government action, even suggesting a nationwide strike if immediate corrections are not made. Corrugated boxes are essential for packaging across various industries, including food, pharmaceuticals, e-commerce, and consumer goods, and they are vital to India’s logistics and supply chain framework. However, the GST increase has led to a substantial rise in production costs while manufacturers are already facing high raw material prices and reduced profit margins.
Industry associations indicate that small and medium-sized enterprises, which dominate the corrugated box manufacturing landscape in India, are particularly affected. An industry spokesperson stated, “The increase in GST has rendered operations unsustainable. Many factories are on the verge of shutting down as they cannot transfer the increased costs to clients who are already sensitive to pricing.” Manufacturers contend that this tax hike will not only jeopardize their operations but also have a cascading effect on sectors that rely on affordable packaging solutions. Industries such as agriculture, FMCG, pharmaceuticals, and e-commerce may incur higher packaging expenses, potentially leading to increased costs for consumers.
In a conversation with Yash Nanda, a corrugated box manufacturer, he expressed, “We are profoundly troubled by the recent GST increase on corrugated boxes. This decision is profoundly unjust to the numerous small and medium manufacturers nationwide. Our industry operates on narrow margins, and this sudden hike will constrain our working capital, thrust us into financial turmoil, and risk many facilities facing permanent closure. The corrugated box sector is not merely about packaging; it supports thousands of workers and sustains vital supply chains for various sectors. By raising GST, the government has imposed an additional strain on an already burdened industry characterized by high input costs and protracted payment cycles.
This policy will restrict our capital, diminish our competitive viability, and threaten the livelihoods of many families. We consider this to be both unfair and unacceptable. We urge the government to promptly reassess and retract the GST increase. Should corrective measures not be enacted swiftly, manufacturers across the nation will be compelled to initiate a unified strike. We cannot permit our businesses and workforce to suffer under such inequitable taxation.” Another industry leader warned, “The government must act quickly to reevaluate the GST rates.
If not, thousands of workers will face job loss, and essential supply chains will be disrupted.” Given that the packaging sector employs thousands of workers both directly and indirectly, the potential for business closures presents not only an economic but also a social dilemma. Manufacturers have appealed to the Finance Ministry for dialogue before the situation deteriorates further. As the call for a strike gains traction, all attention is on the government to address the industry’s concerns and avert a potential collapse of the packaging ecosystem, which is crucial to India’s economy.