GST refund delays strain 600 corrugated box makers in Ludhiana
Industry representatives say GST refunds have been stuck for months for many of Ludhiana's more than 600 corrugated and paperboard box manufacturing units, caused by an inverted duty structure that taxes finished cartons at 5% while raw materials such as kraft and duplex paper are taxed at 18%. Some refunds have been pending since January and February 2026, manufacturers say, while paper prices have risen nearly 30% over the past year, squeezing margins further. Industry bodies have asked the government to streamline refunds and scrap the inverted duty structure.
Why this mattersA prolonged working-capital squeeze across a major Indian corrugated cluster could cut output and orders, with knock-on effects for paper suppliers and packaging customers.
- Ludhiana has more than 600 corrugated box manufacturing units, according to the Punjab Corrugated Box Manufacturers Association
- Cartons, boxes and cases attract 5% GST while kraft paper, duplex paper and paperboard are taxed at 18%
- GST refunds have been pending for several manufacturers since January and February 2026
- Paper prices have risen nearly 30% over the past year
- A duplex and kraft paper supplier reports customers placing fewer and smaller orders due to liquidity issues
- Industry associations have called for an automated refund mechanism and a uniform tax structure across the supply chain