New Delhi, Sep 23 (NationPress) The GST 2.0 rate reductions are poised to significantly enhance multiple sectors in Tamil Nadu, ranging from traditional crafts like handlooms, handicrafts, coir, and fisheries to contemporary industries such as automobiles, electronics, renewable energy, and defence, as stated in an official document released on Tuesday.

With these lowered GST rates, consumer goods will see a decrease in prices, allowing MSMEs to enjoy improved profit margins, exporters to enhance their competitiveness, and large-scale industries to expand more easily. The benefits will be extensive, impacting everyone from the knitwear workers in Tiruppur to the weavers in Kanchipuram, the coir artisans in Pollachi, the fisherfolk in Nagapattinam, the auto workers in Sriperumbudur, and the engineers in Avadi, according to the official statement.

Tamil Nadu’s textile sector is one of the largest in India and is also highly labour-intensive. It supports millions of jobs across districts including Tiruppur, Erode, Karur, Salem, and Kanchipuram, playing a crucial role in India's export economy.

The GST reductions to 5% or nil for textiles, handicrafts, coir, food, and fisheries are expected to drop consumer prices by 6–11%, which will stimulate demand and increase production. Traditional sectors like Kanchipuram silk, Bhavani rugs, Swamimalai icons, and Manapparai murukku will regain their competitiveness.

Moreover, major industries in automobiles, renewable energy, electronics, and defence will also benefit from reduced input costs. Approximately 10 lakh jobs in Tiruppur knitwear, 22 lakh in automotive, and 10.5 lakh in fishing will experience direct positive impacts, as outlined in the statement.

Tiruppur, known as the “Knitwear Capital of India,” employs around 10 lakh individuals and accounts for nearly 90% of India’s cotton knitwear exports, valued at approximately $1 billion. The city boasts over 1,300 exporting units that provide garments to major global retailers.

With the GST lowered from 12% to 5% on low-value apparel, embroidery, and accessories, costs are projected to decrease by 6–11%. This adjustment will enable MSMEs to bolster their profit margins, enhance competitiveness in exports to the US and Europe, and help India maintain its advantage in global knitwear markets, as noted in the statement.

Tamil Nadu’s handicrafts are celebrated worldwide for their artistry and cultural significance. These crafts provide livelihoods for thousands of families, many of whom have inherited traditional skills that will benefit from the GST rate reductions.

The state has a marine fisherfolk population of approximately 10.48 lakh spread across 14 coastal districts. With strong domestic demand and exports valued at Rs 6,957 crore in 2022–23, this sector is essential for Tamil Nadu’s economy. The reduction of GST on processed fish and seafood from 12% to 5% will make products 6–7% cheaper, generating increased demand and higher sales.

Beyond primary sectors, Tamil Nadu’s robust industrial base will see extensive benefits.

Thousands of MSMEs in Tamil Nadu manufacture pumps, small engines, sprinklers, and irrigation tools. With GST cut from 28% to 18% on many parts and from 12% to 5% on sprinklers and hand pumps, equipment prices will drop by 6–8%. This will enable small and marginal farmers to adopt modern irrigation systems, enhancing agricultural productivity.

In 2023, Tamil Nadu accounted for 40% of India’s electric vehicle production, employing 22 lakh people in its automotive sector. The reduction of GST on vehicles and parts from 28% to 18% will effectively lower the tax burden by about 8%. This will make automobiles more accessible for domestic consumers and enhance cost competitiveness for manufacturers and exporters.

The state has a renewable energy capacity of 34,700 MW, which constitutes over half of its energy mix, including 10,500 MW of wind and 7,360 MW of solar. With GST on renewable devices and parts reduced from 12% to 5%, project costs will fall by 6–7%, improving economics for developers and supporting Tamil Nadu’s green energy goals.

Electronics and emerging technologies are also set to gain substantially from the GST restructuring.

Additionally, Sriperumbudur, Oragadam, Kancheepuram, and Krishnagiri have emerged as key electronics hubs. The GST reduction on TVs and monitors from 28% to 18% and on silicon wafers from 12% to 5% will lower consumer prices and decrease input costs for MSMEs in the supply chain, thereby fortifying Tamil Nadu’s growing ESDM exports.

The GST on drones has been reduced to 5% from the previous 18 to 28%, making them 13–18% cheaper and accelerating their adoption in agriculture, defence, logistics, mapping, and infrastructure monitoring. Tamil Nadu is home to several drone startups in Chennai, Hosur, and Coimbatore, positioning the state to lead in this emerging sector.

Tamil Nadu features one of India’s most robust defence and aerospace corridors, with significant facilities in Avadi (Chennai), Coimbatore, Trichy, and Salem. Collectively, these units, along with a growing network of MSMEs, make Tamil Nadu a vital contributor to India’s defence readiness.