Maharashtra's Economic Boost: GST Cuts Drive Growth in Key Sectors

Nagpur: In Nagpur, the Information Technology & Information Technology Enabled Services (IT/ITES) and defence industries have emerged as primary beneficiaries of the Centre's GST changes, according to a ‘factsheet' released by the Union government.

Amendments to the place-of-supply rules for intermediary services have enabled increased software and BPO activities from the city to qualify as exports, allowing them to claim refunds. Additionally, a 5% GST on armoured vehicles and IGST exemption on critical components are expected to reduce procurement costs and boost local defence suppliers. Food processors utilising Nagpur oranges also stand to gain as GST on fruit juices, jams, jellies, and sauces decreases from 12% to 5%.

Across Vidarbha, cotton-growing districts such as Yavatmal and Amravati will benefit from the reduction of GST on yarn and fabrics to 5%, thereby lowering input costs for gins, looms, and garment units. The region's high solar radiation levels make it an ideal market for renewable devices; a 5% GST on solar panels and water heaters is anticipated to reduce prices by 6-7%, accelerating adoption in farms and households.

Maharashtra's sugar belt is set to receive a boost as the GST on refined sugar drops to 5%, likely decreasing wholesale prices by approximately 6-7%. Fisheries along the Konkan coast will see processed and preserved fish taxed at 5%, supporting MSMEs. Handcrafted Warli paintings will now fall under the 5% GST bracket, and Paithani weavers will benefit from reduced GST on essential inputs such as silk and zari.

Automotive clusters are expected to experience increased demand following the reduction of GST from 28% to 18% on auto parts, small cars, and motorcycles under 350cc, as well as the removal of compensation cess on large vehicles. Hotels charging up to Rs 7,500 a night will attract a 5% GST without input credit, making stays more affordable. Individual health and life insurance premiums have been exempted from GST, reducing expenses for households.

Cinema tickets priced at Rs 100 or less now carry a 5% GST, targeting mass-market viewers. In IT and ITES, Maharashtra employs over 1.2 million professionals, with Nagpur emerging as a key delivery hub. The amendment to the place-of-supply rules for intermediary services is expected to enhance cash flows through refunds. Additionally, households will benefit from the reduction of GST on medicaments to 5%, making common medications 6-7% cheaper.