Zero‑Duty ASEAN Notebook Imports & a Skewed GST Regime Are Squeezing Indian MSMEs

India’s notebook industry – a patchwork of over ten thousand micro, small and medium enterprises – is sounding the alarm. In a recent letter to the commerce ministry, the All India Notebook Manufacturers Association (AINMA) says the sector is facing an "existential crisis".

Why? Two things. First, finished notebooks from ASEAN nations – chiefly Indonesia, Thailand and Malaysia – slide into the country without any import duty, thanks to the ASEAN‑India free‑trade pact. Second, the same notebooks are classified as GST‑exempt here, which sounds good for buyers but leaves domestic producers in a tax bind.

When a product is GST‑exempt, manufacturers cannot claim Input Tax Credit (ITC) on the raw materials they buy. That means Indian makers have to pay the regular 18 % GST on paper, coated board, adhesives, stitching wire, inks and cartons, but they can’t recover that outlay. Overseas rivals, on the other hand, pay zero Indian taxes on the finished goods and already enjoy lower raw‑material costs at home.

To make matters worse, the moment the government announced nil GST on notebooks in September 2025, paper mills hiked their ex‑mill prices by about 12‑14 %. So even the supposed consumer benefit evaporated almost instantly.

Industry experts suggest a straightforward fix: pull notebooks out of the exempt bucket and slot them into a modest 5 % GST slab. That would unlock the ITC pipeline, letting manufacturers offset the tax paid on inputs and bring down production costs. An alternative is to keep the rate at zero but retain the product within the tax system – a “zero‑rating” approach that still permits ITC claims.

Some analysts also urge the government to consider a Minimum Import Price (MIP) for ASEAN notebooks, to stop ultra‑cheap imports from undercutting local players. Alongside that, an anti‑profiteering probe into domestic paper pricing could ensure raw‑material costs aren’t being artificially inflated.

In short, the current tax architecture unintentionally favours foreign notebook makers while penalising the very MSMEs that employ thousands of Indians. A modest tax tweak could level the playing field and keep the domestic notebook sector alive.