From basic essentials to enterprises: How GST cuts reshape Delhi’s economy
The recent GST reforms are significantly impacting various sectors in Delhi. Reduced GST on auto parts benefits consumers in and MSMEs, while lower rates for hotel rooms under Rs 7500 boost tourism. The removal of GST on dairy products makes essentials cheaper for delhiites, and reduced rates for beauty and wellness services support women-led businesses. These reforms aim to stimulate economic growth and improve household affordability.
New Delhi: The latest GST reforms are at the center of making cheaper essentials, stronger markets, and new growth avenues for Delhi’s businesses. The GST rate cut aimed at cutting and rationalising rates across a spectrum of goods and services, while simultaneosly aiming to reduce household expenses while stimulating wider economic activity and national growth.
Push for Automotive Markets
Reaping the benefits of latest tax cuts is Delhi which is a leading hub for automotive components trading and home to bustling markets like Karol Bagh and Kashmere Gate. These MSME-driven, family-run networks cater not only to the city’s vast vehicle base but also supply parts across North India and export goods worth nearly Rs 1,000 crore a month to Bangladesh. The reduction of GST on auto parts from 28 percent to 18 percent is expected to lower vehicle maintenance costs for consumers and mechanics by around 7.8 percent.
GST cuts to push tourism in Delhi
As the national capital and a key tourist hub, Delhi attracts leisure, business, and medical travellers. In 2024, its hotel market posted an average occupancy of 72.9% with daily rates averaging Rs 10,273. The revised GST rate of 5 percent for rooms priced below Rs 7,500/night will make hotel stays more affordable, especially for budget conscious travellers in areas like Paharganj and Karol Bagh.
Dairy Products gets cheaper
For households, dairy remains central to consumption in Delhi, supplied by cooperatives such as Mother Dairy and Amul. The removal of GST on items like paneer, UHT milk, butter, and ghee has made them outright cheaper. A 200g paneer pack priced at Rs 90, for instance, will now cost around Rs 85.7. By easing the price of such essentials, the government is directly supporting daily consumption and nudging to choose other healthier alternatives for food consumotion.
GST on Wellness reduced
The GST cuts on Beauty and Wellness services sector are also set to benefit. The beauty and wellness sector are largely women-led and MSME-driven. With the latest GST reforms, taxation reduced from 18 percent (with ITC) to 5 percent (without ITC), services at neighbourhood salons and wellness outlets will cost less, boosting customer footfall and helping stabilise incomes for beauticians, therapists, and entrepreneur.