Kraft Paper Price Hikes Put 30,000 Corrugated Packaging MSMEs Under Financial Pressure

Lucknow, Sep 28 (KNN) The corrugated packaging industry is facing renewed financial pressure as kraft paper mills continue to raise prices ahead of the festive season, squeezing margins and working capital for box manufacturers.

Kraft Paper Prices Rise 25-30 Per Cent

According to the Uttar Pradesh Corrugated Box Manufacturers Association, kraft paper prices have increased by around 25-30 per cent in less than two months, while prices of high-BF kraft paper have risen further. 

The repeated hikes have added to the cost burden of manufacturers operating on thin margins.

Industry Seeks GST Council Intervention

The association has urged the GST Council to intervene, warning that the combined impact of higher input costs, outstanding liabilities, credit constraints and bank loan obligations could threaten the viability of thousands of MSMEs.

It said disparities in the GST structure and rising raw material costs have created an estimated 13 per cent additional burden on the industry, affecting more than 30,000 MSMEs and over 10 lakh jobs.

Working Capital Gap Widens For Box Manufacturers

The industry is also facing a widening working-capital gap. While kraft paper suppliers previously offered credit periods of 30-60 days, many are now seeking payment within seven days. In contrast, corrugated box manufacturers often receive payments from customers after several months.

GST Structure Adds To Industry Cost Pressure

The association has also flagged the GST structure, noting that GST on corrugated boxes was reduced from 12 per cent to 5 per cent, while the tax rate on kraft paper, a key input, was increased from 12 per cent.

(KNN Bureau)