Temporary respite: on GST, India’s manufacturing  

India’s Goods and Services Tax collection in April, since the indirect taxation framework was implemented in 2017, has consistently hit record highs. This April was no different — generally because of businesses tallying their books and completing their financial year-end tax commitments. The gross GST collected this time was about ₹2.37 lakh crore, marking an on-year growth of 12.6% from last April. After refunds, the central government netted over ₹2.09 lakh crore, an on-year rise of 9.1%. This also signifies a marked rise in GST compliance, also aided by faster refunds, which are crucial for small businesses as they work with thin working capital, and the mass adoption of fintech. The fintech adoption rate in India, at 87%, which is well above the global average, and aided by the insular COVID-19 years of 2020-21, has brought in millions from the MSME sector into the formal banking system, enabling better tax compliance and regulatory supervision. Wider compliance is also evident from April’s GST collections from 2018 to 2025, which has more than doubled from ₹1.03 lakh crore to ₹2.37 lakh crore.

What is significant this April has been the 86% rise in refunds issued to exporters and the 20.8% increase in GST revenues from imports. This correlates with the 10-month high growth in the April print of HSBC India Manufacturing Purchasing Managers’ Index (PMI). The PMI rose from 58.1 in March to 58.2 in April. The survey indicated a sharp rise in new business aided by greater international demand. Orders from abroad grew to the largest degree in over 14 years in the first month of the 2026 fiscal year, with demand led by Africa, Asia, Europe, West Asia and the Americas. This suggests that businesses have scrambled to get their orders in before the 90-day pause on tariffs by the U.S. ends on July 9. It also suggests a possible re-alignment in supply chains, with greater sourcing from India, as the U.S. tariffs on China appear to be more onerous and certain, with the possibility of transshipment goods from China being taxed, without a high value-add threshold. Apple has said at its January-to-March quarterly earnings call that it intends to source ‘most of its iPhones’ for the U.S., its largest market, from India. This suggests a temporary respite for India’s manufacturing sector, which witnessed a four-year growth low at 4% in the last fiscal. A more durable growth strategy would be to boost domestic consumption and wrangle favourable concessions for its manufacturing sector from the many ongoing trade agreements.