The waning sheen: on prices, GST rationalisation

The February GST mop-up shows an awesome year-on-year emergence of 8.1%, with gross collections touching astir ₹1.83 lakh crore. Much of this has rightly been attributed to rising depletion expenditure aft the GST model was rationalised into a two-tiered complaint operation of 5% and 18% successful September 2025. The complaint cuts made user non-durables cheaper, and helped sustained income successful automobiles, appliances, mobiles and tourism-linked services. Yet, a captious vulnerability has been mostly overlooked — the not-so-trivial import IGST numbers, which saw a spike of implicit 17% this February compared with past year. This indispensable beryllium viewed from a holistic position to recognize however it affects consumption, prices and the increasing disparity successful GST collections betwixt States. Import IGST collections successful February roseate to astir ₹47,800 crore, up from astir ₹40,800 crore a twelvemonth ago. A five-year examination of February collections (FY22–FY26) shows a astir 41% emergence from ₹33,800 crore successful February 2022. At the aforesaid time, the rupee has steadily weakened. The rupee fell astir 4% against the dollar betwixt February 2025 and February 2026, and astir 6.2% from April 2025 to February 2026. This matters arsenic cardinal imports are mostly dollar-denominated.

India imports implicit 90% of its semiconductor requirements and relies heavy connected crude oil, copper and aluminium imports — which unneurotic made up astir 35% of February 2026 merchandise imports. Crude lipid accounts for implicit a 4th of full imports, portion semiconductors lend astir 5%, and copper and aluminium unneurotic different 3%-4%. Import values for copper and aluminium person risen materially implicit the past year, reflecting terms firming and measurement increases. Semiconductor imports person besides grown sharply, adjacent arsenic planetary shortages persist. Meanwhile, crude import reconfiguration — from discounted Russian barrels to the U.S. and West Asia — apt accrued India’s mean import bill. Higher planetary prices combined with a weaker rupee mechanically inflate the assessable worth connected which IGST is levied. These rising input costs provender into captious sectors specified arsenic automobiles and appliances. There are besides signs of unevenness crossed States. Major States specified arsenic Tamil Nadu (-6%), Maharashtra (6%) and West Bengal (1%) lagged the nationalist maturation complaint of 8% successful February. This divergence suggests that nationalist GST buoyancy has been disproportionately supported by import-led revenues alternatively than uniformly beardown home demand. Import IGST is present astir 27% of gross GST collections successful the April 2025-February 2026 period, up from astir 24% successful the erstwhile twelvemonth — underscoring a increasing dependence connected import-tax revenues. Higher input costs could nullify GST rationalisation terms relief, starring to higher costs for consumers.