The waning sheen: on prices, GST rationalisation Politics & News

The February GST mop-up shows an impressive year-on-year rise of 8.1%, with gross collections touching about ₹1.83 lakh crore. Much of this has rightly been attributed to rising consumption expenditure after the GST framework was rationalised into a two-tiered rate structure of 5% and 18% in September 2025. The rate cuts made consumer non-durables cheaper, and helped sustained sales in automobiles, appliances, mobiles and tourism-linked services. Yet, a critical vulnerability has been largely overlooked — the not-so-trivial import IGST numbers, which saw a spike of over 17% this February compared with last year. This must be viewed from a holistic perspective to understand how it affects consumption, prices and the growing disparity in GST collections between States. Import IGST collections in February rose to roughly ₹47,800 crore, up from about ₹40,800 crore a year ago. A five-year comparison of February collections (FY22–FY26) shows a nearly 41% rise from ₹33,800 crore in February 2022. At the same time, the rupee has steadily weakened. The rupee fell about 4% against the dollar between February 2025 and February 2026, and roughly 6.2% from April 2025 to February 2026. This matters as key imports are largely dollar-denominated.

India imports over 90% of its semiconductor requirements and relies heavily on crude oil, copper and aluminium imports — which together made up about 35% of February 2026 merchandise imports. Crude oil accounts for over a quarter of total imports, while semiconductors contribute about 5%, and copper and aluminium together another 3%-4%. Import values for copper and aluminium have risen materially over the past year, reflecting price firming and volume increases. Semiconductor imports have also grown sharply, even as global shortages persist. Meanwhile, crude import reconfiguration — from discounted Russian barrels to the U.S. and West Asia — likely increased India’s average import bill. Higher global prices combined with a weaker rupee mechanically inflate the assessable value on which IGST is levied. These rising input costs feed into vital sectors such as automobiles and appliances. There are also signs of unevenness across States. Major States such as Tamil Nadu (-6%), Maharashtra (6%) and West Bengal (1%) lagged the national growth rate of 8% in February. This divergence suggests that national GST buoyancy has been disproportionately supported by import-led revenues rather than uniformly strong domestic demand. Import IGST is now roughly 27% of gross GST collections in the April 2025-February 2026 period, up from about 24% in the previous year — underscoring a growing dependence on import-tax revenues. Higher input costs could nullify GST rationalisation price relief, leading to higher costs for consumers.