GST Rate Cuts to Boost Agriculture, Tourism, and Industry in Uttarakhand

New Delhi/Dehradun, October 21, 2025: In a move set to bolster Uttarakhand’s hill economy and support its small producers, artisans, and industrial workers, the government has announced a series of Goods and Services Tax (GST) reductions across key sectors including agriculture, tourism, cottage industries, and manufacturing. The GST rationalisation aims to make local products more affordable, stimulate demand, and promote sustainable livelihoods in both the hill and plain regions of the state.

One of the most significant beneficiaries of this tax reform is the agricultural sector. The GST on traditional hill produce such as Pahari Toor Dal, Uttarakhand Red Rice, and the GI-tagged Almora Lakhori Mirchi has been reduced from 12% to 5%. This is expected to lower retail prices and improve market competitiveness for small and marginal farmers across 13 hill districts. These crops, cultivated largely through organic and mixed farming systems, form a crucial part of the state’s agro-biodiversity and dietary traditions. Thousands of farmers are set to benefit through better income opportunities and expanded access to niche and health-conscious markets.

Tourism, a key contributor to Uttarakhand’s economy, has also received a boost. The GST on hotel tariffs up to Rs 7,500 has been brought down from 12% to 5%. This is expected to make travel more affordable and benefit the nearly 80,000 people employed directly or indirectly in the hospitality sector, particularly in popular destinations like Nainital, Mussoorie, Haridwar, Rishikesh, and Auli. The move is also likely to encourage growth in the homestay and eco-tourism sectors, which play a vital role in local employment generation.

Traditional crafts and cottage industries, many of which are women-led, are another major focus of the reform. GST has been slashed to 5% for a range of heritage products such as Aipan art from Kumaon, hand-knitted woollen garments, and bamboo-based Ringal crafts. These changes are expected to benefit thousands of artisans, improve sales, and preserve indigenous knowledge systems. In particular, the reduction will support efforts to expand the reach of GI-tagged crafts and promote them through online platforms and tourism-linked markets.

 

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The manufacturing sector is also poised to gain from the GST revisions. In a major relief to the automobile industry, the tax on vehicles up to 1200cc (petrol) and 1500cc (diesel) has been reduced from 28% to 18%. This is likely to bring down vehicle prices by 8–10%, stimulate consumer demand, and support the automobile manufacturing hubs in Pantnagar, Rudrapur, Haridwar, and Kashipur, which collectively employ over 50,000 people. Additionally, the medical device manufacturing sector located in the SIDCUL industrial area will benefit from a GST reduction from 12% to 5%, encouraging greater investment and lowering production costs in Uttarakhand’s growing MedTech ecosystem.

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Food processing units, which employ nearly 30,000 people across the state, are also expected to see improved margins due to the 5% GST rate. This change will particularly support value-added products in organic food, herbal supplements, and fruit processing—key areas of Uttarakhand’s agro-industrial economy.

The GST reforms are widely seen as a strategic step toward bridging the economic gap between the hills and plains of Uttarakhand. By lowering tax burdens across sectors central to the state's cultural and economic identity, the government aims to boost livelihood security, strengthen local industries, and attract sustainable investment. The move aligns with Uttarakhand’s broader vision of inclusive, green, and self-reliant development.

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