How does the uniform 18% GST affect book publishing and printing?

GST rising for print

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publishing and printing

The Indian finance minister recently raised the Goods and Services Tax (GST) on printed products from a variety of levels such as 5%, 12%, and 18% to a uniform 18% on all print products. Much of the industry has protested through its associations that this level of GST on all products will adversely impact an industry that is already reeling from the Covid-19 pandemic. Commercial print and newspaper, magazine, and book publishing have been significantly impacted by the pandemic and the lockdowns of the education, travel, hospitality, and retail segments in particular.

For book publishing and book printing industries (already operating primarily in the lowest priced market in the world) the new 18% GST has become a show stopper. Since a publisher will now have to pay GST on the paper and printing cost at a rate of 18%, and also pay a GST of 12% on authors royalties, the publisher will wind up paying a considerable amount of GST without any hope of recovering or adjusting this (as reversal/input credit) against the sales of books to wholesalers, distributors, and retailers since there is no GST on the sale of books.

This becomes an added cost to the publisher without any hope of setting it off or adjusting it to the sale of his products. It will make it impossible for a publisher to produce cheaper books, as even the cheapest books will have to increase their retail sale price by at least Rs 50 or Rs 100 at the very least to cover their costs let alone to show any profit.

One remedy may be for the government to levy a 5% GST on all books including text and general books which will also help to quantify and govern an industry in which the statistics are poor and which has many small and unorganized players. A proposal and study to this effect had already been submitted to the GST council by one of the associations even before this new standardization of GST levies was introduced in October.

2023 promises an interesting ride for print in India

Indian Printer and Publisher founded in 1979 is the oldest B2B trade publication in the multi-platform and multi-channel IPPGroup. While the print and packaging industries have been resilient in the past 33 months since the pandemic lockdown of 25 March 2020, the commercial printing and newspaper industries have yet to recover their pre-Covid trajectory.

The fragmented commercial printing industry faces substantial challenges as does the newspaper industry. While digital short-run printing and the signage industry seem to be recovering a bit faster, ultimately their growth will also be moderated by the progress of the overall economy. On the other hand book printing exports are doing well but they too face several supply-chain and logistics challenges.

The price of publication papers including newsprint has been high in the past year while availability is diminished by several mills shutting down their publication paper and newsprint machines in the past four years. Indian paper mills are also exporting many types of paper and have raised prices for Indian printers. To some extent, this has helped in the recovery of the digital printing industry with its on-demand short-run and low-wastage paradigm.

Ultimately digital print and other digital channels will help print grow in a country where we are still far behind in our paper and print consumption and where digital is a leapfrog technology that will only increase the demand for print in the foreseeable future. For instance, there is no alternative to a rise in textbook consumption but this segment will only reach normality in the next financial year beginning on 1 April 2023.

Thus while the new normal is a moving target and many commercial printers look to diversification, we believe that our target audiences may shift and change. Like them, we will also have to adapt with agility to keep up with their business and technical information needs.

Our 2023 media kit is ready, and it is the right time to take stock and reconnect with your potential markets and customers. Print is the glue for the growth of liberal education, new industry, and an emerging economy. We seek your participation in what promises to be an interesting ride.

– Naresh Khanna

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