Uttarakhand’s diverse economy — where terraced fields meet bustling tourist towns and age-old crafts coexist with modern manufacturing — is set for a major boost following the recent Goods and Services Tax (GST) rationalisation.
The sweeping tax cuts, spanning agriculture, tourism, handicrafts, and industry, are expected to make local goods more competitive, lower consumer prices, and generate employment across the hill state.
The rate reductions — including a 5% GST on local farm produce and handicrafts, and an 18% rate on automobiles — align with the state’s goal of sustainable, inclusive growth.
Agriculture & Local Produce: Relief for Hill Farmers
Pahari Toor Dal
Cultivated in Chamoli, Almora, Tehri, Nainital, and Pithoragarh, Pahari Toor Dal forms part of Uttarakhand’s indigenous Barahnaja mixed cropping system. With GST reduced from 12% to 5%, this locally grown, organic pulse is expected to become more affordable and competitive in organic food markets. The move is projected to enhance income for small and marginal farmers across 13 hill districts.
Uttarakhand Red Rice
Traditionally grown in Purola and Mori, the nutrient-rich red rice variety is a staple of the state’s agro-biodiversity. The GST cut from 12% to 5% is likely to reduce consumer prices and improve market reach for over 4,000 people engaged in cultivation, packaging, and distribution.
Almora’s Lakhori Mirchi
The Geographical Indication (GI)-tagged Lakhori Mirchi of Almora — famed for its intense colour and aroma — will also benefit from the reduced GST rate of 5%. The change is expected to help nearly 5,000 farmers and traders, enhancing the market presence of this unique hill spice.
Tourism & Cottage Industries: A Boost to Local Enterprises
Tourism and Homestays
Tourism remains the backbone of Uttarakhand’s economy, accounting for nearly 13.5% of its Gross State Domestic Product (GSDP) and supporting around 80,000 jobs. The GST cut from 12% to 5% on hotel tariffs up to ₹7,500 per night is expected to make destinations like Nainital, Mussoorie, Auli, Chopta, and Rishikesh more affordable for visitors. The move will particularly aid small hotels, lodges, and family-run homestays.
Aipan Art and Handicrafts
Aipan, the traditional decorative art of Kumaon, has evolved from ritual wall designs to contemporary merchandise such as bags, coasters, and murals. With GST now at 5%, around 4,000 women artisans stand to gain from expanded demand and better margins, strengthening women-led creative enterprises across Almora, Bageshwar, and Nainital.
Woollen Garments and Crafts
Hand-knitted sweaters, caps, and socks — an integral part of Uttarakhand’s winter trade — will also benefit from the GST cut to 5%. The reform is expected to lower retail prices by 6–7% and support nearly 10,000 women engaged in seasonal home-based knitting.
Ringal (Hill Bamboo) Craft
The traditional Ringal craft, based on a local species of dwarf bamboo, sustains thousands of families across Pithoragarh, Champawat, and Nainital. By reducing GST to 5%, the government aims to revitalise this heritage craft, which provides supplementary income to almost half of rural households in parts of Garhwal.
Traditional Woollen Products
From Pankhi shawls to handwoven stoles, Uttarakhand’s woollen crafts — made from local sheep wool in Chamoli, Uttarkashi, and Bageshwar — will now be cheaper and more marketable. The 5% GST rate is expected to drive sales at local fairs and e-commerce platforms, preserving traditional designs and supporting hill women artisans.
Industrial Growth: Lower Taxes, Higher Output
Food Processing
With 383 registered food processing units employing nearly 30,000 workers, Uttarakhand’s agro-industrial sector is set to benefit from lower input costs. The GST cut from 12% to 5% on processed food items is likely to enhance profit margins, spur investment, and promote value addition in fruit, herbal, and organic product segments.
Automobile Sector
The state’s industrial belt — covering Rudrapur, Pantnagar, Haridwar, and Kashipur — is a key automobile manufacturing hub. The GST reduction from 28% to 18% on vehicles up to 1200cc (petrol) and 1500cc (diesel) will make cars 8–10% cheaper. This is expected to revive demand, sustain 50,000 jobs, and strengthen the local supply chain ecosystem.
Medical Device Manufacturing
Uttarakhand’s Medical Device Park at SIDCUL employs around 4,000 workers in the fast-growing MedTech sector. With GST now at 5% on medical devices, manufacturers are expected to gain cost advantages, attract new investments, and enhance competitiveness in healthcare equipment production.
Conclusion: A Step Toward Sustainable, Inclusive Growth
The comprehensive GST rationalisation marks a decisive step in integrating Uttarakhand’s mountain economy with national growth trends. By reducing tax burdens across critical sectors, the reforms promise tangible benefits — from the hill farmer in Pithoragarh and the artisan in Almora to the factory worker in Rudrapur.
Lower taxes, better affordability, and increased competitiveness are poised to stimulate tourism, boost MSMEs, and promote green entrepreneurship. Together, these measures strengthen the state’s vision of an inclusive, sustainable, and self-reliant Uttarakhand — where tradition and modern enterprise thrive side by side.
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