India’s GST 2.0 reforms are set to deliver more relief to domestic manufacturers than importers, with less than 7 percent of the country’s imports expected to get cheaper, a Moneycontrol analysis shows.
Of the $721 billion worth of goods imported in FY25, only about $50 billion are likely to see lower duties under the new structure. On September 3, the GST Council approved a dual-rate system that moves 90 percent of goods into the lower 5 and 18 percent slabs from the earlier 12 and 28 percent.
A look at India’s top imports explains the limited impact. Items such as photovoltaic (PV) cells ($2.2 billion) and automotive parts like gearboxes, drive axles and brake linings—all central to India’s solar and automobile ambitions—feature prominently in the revised GST list. Rates on PV cells have been cut from 12 percent to 5 percent, while gearboxes and brake assemblies will now attract a 5 percent levy compared with 18 percent earlier.
The relief, thus, is geared toward making domestic production cheaper, rather than lowering the cost of consumer imports.
Widely consumed food imports form a small share of the basket. Almonds, dates, and cocoa butter are covered, but their overall import value remains marginal. For instance, India imported just $13.3 million worth of cheese in FY25—now taxed at 5 percent instead of 12 percent—while confectionery imports stood at only $30 million. Cocoa and chocolate imports were larger at $700 million, while sauces were just $50 million.
The muted impact on India’s $721 billion import bill highlights the government’s intent to keep GST rationalisation aligned with its Make in India priorities, ensuring relief filters through to domestic producers and manufacturing chains rather than foreign suppliers.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
