Budget 2020: Marred by GST, stationery market seeks rate cut for edge over ‘run of the mill’ products

Updated: February 01, 2020 9:48 AM

Budget 2020 India: There is a feeling that the importance of stationery products has declined due to digitalization, but the stationery industry, which has a legacy going back to centuries, is a vital player in the Indian consumer market.

Budget 2020, Union Budget 2020 India, Budget 2020 India, Budget 2020-21Budget 2020-21: There is a need that the high incidence of duties – goods and services tax is contained for the upmarket stationery goods. (Image: Reuters)
  • By Vinod Krishna

Union Budget 2020 India: There is a feeling that the importance of stationery products has declined due to digitalization, but the stationery industry, which has a legacy going back to centuries, is a vital player in the Indian consumer market and needs to be getting the support for its further development, to be able to keep pace with the shift in focus and emphasis. With a preponderance of products in the global stationery market, there has been the emergence of innovative ways of creating and selling stationery products to have an edge over the “run of mill’ products. 

The above is particularly prominent for products which help plan the day-to-day, week-to-week, month-to-month and year-to-year needs of consumers and this includes high-end diaries, notebooks, planners-organizers and writing instruments and a host of connected products thereof for both the personal needs as also for gifting, including corporate gifting.  It requires mention that in the year 2018 the stationery industry was valued at $ 13.9 billion with the reach to cover the age groups from children upwards to the middle and higher range, and this sector is expected to garner a revenue of over $ 13.9 billion by 2025. 

GST Cut

With the increase in per capita income and with education and job opportunities enlarging, more and more people are looking for products of better quality and in the “well to do” sector.  This manifests itself in getting branded items and there is a tremendous scope in this category of products under the “Make in India” scheme for attracting more and more consumers particularly in consonance with upcoming schemes and strategies introduced by the Government.

It is important that this segment is encouraged and is not burdened with high incidence of duties-goods and services tax, which make it hard to afford for such products not only for school/college going students, but also for the cross-section of consumers in various walks of life, and particularly those with a penchant for quality and luxury.  

In this regard, there is a need that the high incidence of duties – goods and services tax is contained for the upmarket stationery goods so that India participates in this growth of quality writing instruments and the market for quality products which help, plan and organize life in not only the short-term but also in the medium and long term. However, due to the high incidence of GST (CGST & SGST), the branded stationery product market is adversely affected, and both the availability and volumes are not anywhere near to their potential due to the high incidence of duties/GST.  As an example, there is no logic in putting fountain pens in a separate category with 18 per cent GST, whilst for mechanical pencils, ballpoint and rollerball pens the GST is 12 per cent. This adversely affects the easy availability of fountain pens at a reasonable price, particularly the medium to high-class pens/fountain pens. 

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The government should be promoting the use of refills and inks, with GST slab of 12 per cent when there is every logic for the same to be restricted 5 per cent slab.  Accordingly, there is great expectation that the GST would stand reduced by one slab – 18 per cent to 12 per cent for fountain pens; 12 per cent to 5 per cent for ball pen and roller ballpoint pens, and the slab for refills and inks requires reduction from 12 per cent to 5 per cent as well.

With respect to products which help plan daily, weekly, monthly and yearly planning needs, a one slab reduction in GST is required. For example, on organizers and dairies the GST range should not be in the 18 per cent slab, but in the 12 per cent slab, while for mechanical pencils including promotion of those products to meet the needs of quality-conscious consumers, the GST slab requires reduction to 5 per cent, for refills-inks and not the existing 12 per cent.  Also, the GST for mechanical pencils should fall in the 5 per cent slab, and not 12 per cent as a price list.  

Affordability Quotient

Then there are some allied products which an offshoot of the growing requirement-needs in the market for the better quality of products are and in this direction are credit card, wallets which are for meeting the growing requirement of both carrying and protection of credit cards. However, branded wallets meet the need for protection of credit cards, including safeguarding against identity theft. Use of such wallets, for example, Ogon Design wallets originating from Paris in France, protect your personal data against identity theft. Such wallets are unaffordably priced and for them to fall in the affordable middle-income group upwards, the same should be in the price range of within Rs 2,000; hence, the GST slab of 18 per cent is too high and would require reduction not only to 12 per cent but to 5 per cent and all types of wallets would then fall in this lower slab and make a dent in the market. 

These moves by the government in the forthcoming budget will help encourage innovatively of marketing and selling such products, and to meet the growing need for customization, to meet the needs of the consumers and whilst we have seen the emergence of pens, notebooks, diaries and related range of products having both, quality and at times customization, there is a need for push in terms of reduced GST rates-slabs for this segment to grow in volumes and quality, and offer different sizes-shapes and a wide range of hues-colours to the consumers to choose from.

With the upcoming schemes and a reduction in GST on many luxury writing instruments, and on products which help, plan, organize and meet the day-to-day, month-to-month and year-to-year needs of customers, the year 2020 will indeed promote and help these products grow to meet the needs of all segments, including the medium upwards, income group.

(Vinod Krishna is the Chairman at Livtek India. Views expressed are the author’s own.)

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