A rising share of import-based GST revenue signals structural concerns for domestic manufacturing. Critically analyse.

In September 2026, gross GST rose 14.7% to ₹2.03 lakh crore. Within that, GST on imports grew 25.9% while domestic GST grew only 10.1%, so imports' share of revenue reached its highest-ever level [1]. This is a valid warning sign for manufacturing, but on its own it does not prove a structural decline.

Why it signals structural concern

• Uneven growth: import GST (₹65,525 crore) is growing about 2.5 times faster than domestic GST, and now makes up roughly a third of gross collections [1].
• Import substitution gap: some imports may be finished goods that replace Indian products. If so, this undercuts Make in India and the ₹1.91 lakh crore PLI scheme, which was designed to reduce import dependence [2].
• Low value addition: factories that only assemble imported components add little value in India, which keeps the domestic tax base thin.
• External vulnerability: revenue that depends on imports is more exposed to the current account deficit, global prices and swings in the rupee.

Why the signal may be overstated

• How GST is designed: IGST on imports is levied at customs under Article 269A [3]. Importers later claim it as input tax credit against tax on their domestic sales. So revenue moves from the "domestic" column to the "import" column even when the value is added in India.
• Price, not volume: import GST is charged on the rupee value of goods. Higher global prices or a weaker rupee raise it even if no more goods come in.
• Inputs and machinery: imported capital goods and raw materials that feed Indian factories point to investment, not de-industrialisation.
• Domestic base still growing: domestic GST grew 10.1% even though rates were lower than a year earlier. More audits and simpler compliance helped [1].
• PLI gains are visible: 191 bulk drugs are now made in India for the first time, and telecom has achieved about 60% import substitution [2].

Way forward

• CBIC should publish import GST by type of goods: raw materials, capital goods and consumer goods.
• This data should be checked against Commerce Ministry trade volumes and output in PLI sectors.
• Inverted duty structures that make imported inputs cheaper than domestic ones should be corrected.

The rising import share is an early warning, not a final verdict. Its real meaning depends on what is being imported, and current GST data cannot show that. Better data, combined with deeper domestic value chains through PLI and Atmanirbhar Bharat, in line with SDG 9, can make sure GST growth rests on value added in India.