GST2.0 reforms support local manufacturers; less than 7% of imports expected to get cheaper

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.

Industrial inputs such as chemical wood pulp, ammonia, and gas compressors are also included, with most rates brought down to 5 percent.

The relief, thus, is geared toward making domestic production cheaper, rather than lowering the cost of consumer imports.