Mint Explainer | What is driving the surge in GST collections from imported goods?

India’s goods and services tax (GST) revenue from imports surged 42.2% year-on-year to ₹72,246 crore in October, growing nearly three times as fast as domestic GST collections, which rose about 16% to ₹1.59 trillion. The increase in import-related revenue helped push overall gross GST collections up 22.9% to ₹2.31 trillion. Mint examines what is driving the faster growth in tax receipts from imports and what it means for government revenues and domestic manufacturing.

GST revenue from imports has grown significantly faster than domestic collections. Import-related GST revenue increased to ₹72,246 crore in October from ₹50,796 crore a year earlier, a rise of 42.2%. In comparison, domestic GST revenue increased to ₹1.59 trillion from ₹1.37 trillion, registering an about 16% growth. The difference is also visible in net collections after refunds. Net revenue from imports increased 56.2% to ₹58,319 crore, while net domestic revenue grew 16.4% to ₹1.45 trillion.

Imports accounted for around 31% of total gross GST collections in October, compared with approximately 27% a year earlier. During April-October FY27, gross GST revenue from imports rose 29.3% to ₹4.44 trillion, while domestic revenue increased 7.4% to ₹10.33 trillion. The increase could reflect several factors, including higher import values, changes in international commodity prices, rupee depreciation, increased import volumes and stronger manufacturing activity.

GST on imported goods is collected as integrated GST (IGST) at the time of customs clearance. The tax is calculated on the assessable value of imported goods, along with applicable customs duties. This means that even if import volumes remain unchanged, higher international prices or a weaker rupee can increase the taxable value and the GST collected. Geopolitical tensions, particularly those affecting the Strait of Hormuz, have also influenced commodity prices and freight costs, adding to the landed cost of imported goods.

Customs valuation includes freight and insurance, subject to applicable rules. For instance, if a product's international price rises from $80 to $100, its dollar value increases by 25%. If the rupee also depreciates against the dollar, its value in Indian currency rises further, creating an additional increase in the taxable value. India imports a range of industrial inputs, including electronic components, machinery, chemicals, metals and specialised equipment used by domestic manufacturers.

Electronics manufacturing is one example. While India has expanded domestic production and assembly of electronic products, several components and specialised inputs continue to be sourced from overseas suppliers. Similarly, domestic industries depend on imported machinery, chemicals and intermediate goods. Higher imports of these products could therefore contribute to the increase in import-related GST collections.

Faster growth in GST collections from imports has raised their share of the total GST kitty. It may also reflect stronger industrial activity, as higher manufacturing output can increase demand for imported raw materials, intermediate goods and machinery. October's Index of Industrial Production (IIP) data, due in the last week of November, will provide a clearer indication of whether industrial activity continued to strengthen.

Manufacturing is receiving a policy push through initiatives such as production-linked incentive schemes for mobile phones and other sectors. Higher imports of components and machinery could reflect expanding domestic production capacity. Imports are not necessarily a negative indicator for manufacturing as imported intermediate goods support domestic production, improve productivity and provide access to technologies that may not be available locally.

Depreciation of the local currency against the US dollar can increase the rupee value of imported goods and, consequently, the IGST collected at customs. The exchange rate averaged ₹88.42 per dollar in October 2025, according to the Reserve Bank of India's Database on Indian Economy, compared with ₹95.25 on 30 October 2026. This indicates an increase of about 7.7% in the rupee cost of a dollar. For instance, a product valued at $100 would be worth about ₹8,842 at the earlier exchange rate and ₹9,525 at the later rate, an increase of around ₹683, even without a change in its dollar price or quantity.

Thus, currency depreciation can raise import-related GST collections without an increase in import volumes. No. Crude oil does not directly contribute to import-related GST collections, as petroleum crude, petrol, diesel, natural gas and aviation turbine fuel (ATF) are currently outside the GST framework. However, certain petroleum-derived products, including lubricating oils, petroleum coke, bitumen, paraffin wax and some petroleum-based chemicals fall under GST and can contribute to import-related IGST collections.

Their tax treatment depends on the product classification and applicable rate. “The 42.2% growth in GST collections from imports...should be viewed through a three-fold lens. First, India's expanding manufacturing ecosystem is driving higher imports of plant and machinery, raw materials and intermediate goods, indicating capacity creation and future production growth. Second, persistent global supply-chain disruptions and elevated international freight costs have increased the landed value of imports.

Third, the depreciation of the Indian Rupee by nearly 7% over the past year has further amplified import values in rupee terms,” said Vivek Jalan, partner, Tax Connect Advisory Services LLP. “Consequently, the import-led GST surge is not merely a trade statistic but a reflection of industrial expansion, investment activity and economic resilience, underscoring the strong fundamentals supporting India's medium-term GDP growth and fiscal health,” he added.