India's Lined Paper Exports Under Fire as US Launches WTO Probe

India has come under scrutiny at the World Trade Organisation (WTO) after the United States launched a series of countervailing duty investigations, naming India among the countries allegedly offering export-linked subsidies in violation of global trade rules. This move, which was previously concentrated on China, now puts India squarely in the spotlight, especially over its stationery exports, including the globally competitive lined paper products.

US Targets Four Indian Product Categories

According to WTO documents reviewed by Mint, the US has specifically named the following four Indian product categories in its probe:

• Lined paper products (school notebooks, ruled pads, diaries)

• Oil country tubular goods

• High chrome cast iron grinding media

• 2,4-Dichlorophenoxyacetic acid (a herbicide)

Among these, lined paper products have drawn particular attention due to India’s significant export footprint in this segment. The US argues that India’s subsidies for promoting exports violate the WTO's anti-subsidy norms, which prohibit direct or indirect export incentives.

Impact on India’s Paper Industry Hubs

India is the world’s second-largest exporter of lined paper products. The potential imposition of higher tariffs by the US could directly impact export operations in major manufacturing hubs across Tamil Nadu and Maharashtra. Notably, the US market is crucial for Indian paper exporters due to its volume and quality-driven demand.

Currently, Indian stationery exports face a hefty 36% tariff in the US market, significantly limiting their competitive edge. For comparison, Vietnam, a leading competitor, holds a 27% share in the $944-million US stationery market, while India lags behind with an 8.5% share, amounting to $80.3 million in exports.

A Trade Deal in the Works

This development comes at a sensitive time when India and the US are negotiating a bilateral trade agreement (BTA), with the fifth round of talks underway. India’s chief negotiator, Rajesh Agarwal, is currently in Washington, pushing to finalise a “pre-harvest” deal by the 31st of July.

Manoj Kumar Reddy, Senior Policy Consultant at the Centre for Digital Economic Policy Research (C-DEP), stated:

“The US-India BTA offers a game-changing opportunity for Indian lined paper exporters. Removing the additional 26% duty would level the playing field, allowing India’s manufacturing hubs to compete in terms of quality and scale.”

Industry Leaders Await Clarity

Key players in India’s stationery export sector include ITC and Navneet Education Ltd, both of which have a significant presence in the US market. While queries sent to ITC’s communication head remain unanswered, Navneet’s MD, Sunil Gala, noted in a regulatory filing to SEBI dated 22 May that:

“Overseas exports of stationery witnessed 12% growth instead of the 15% that was expected.”

The modest shortfall in export performance could be indicative of growing uncertainty in the global trade environment.

What Lies Ahead?

If the WTO probe leads to punitive tariffs or countervailing duties, Indian exporters may find themselves priced out of a lucrative market unless trade negotiations succeed in offering tariff relief. With India already ranking second globally in lined paper exports, even a partial removal of trade barriers could significantly enhance its market share.

As the 31 July deadline for the bilateral trade deal approaches, industry stakeholders are watching closely—hoping for a breakthrough that could either avert the impact of WTO scrutiny or mitigate the blow with preferential trade terms.