GST cuts: UP economy projected to gain Rs 30K cr
Lucknow: Uttar Pradesh, the country’s largest consumer market, is expected to emerge as one of the top beneficiaries of the new two-slab GST structure. The reduction in rates is projected to give a direct boost to consumers while creating long-term gains of up to Rs 30,000 crore for the state economy, despite an initial revenue shortfall of around Rs 3,500 crore.
The sharpest relief comes in healthcare, with GST on insurance premiums reduced from 18 percent to zero. This is expected to bring an additional 90 lakh people under the insurance net and expand the scope of cashless treatment in hospitals. Insurance companies anticipate at least 50 lakh new policies from Uttar Pradesh by March. Industry experts say the pharma and healthcare sectors could see growth of up to 20 percent, with 27 allied areas projected to expand by 10 to 15 percent. The upcoming pharma park in Lalitpur is also expected to pick up pace.
The construction sector will gain from the 10 percent GST cut on cement, which is expected to reduce prices by about 8 percent. This will lower home-building costs for families and free up funds for infrastructure and development projects. JK Cement Joint MD and CEO Madhav Singhania said: “Cement is not a luxury item but a basic product linked to development. Lower GST will bring down rates and expand the scope of growth.”
Vehicle buyers in the state will also benefit. Auto dealers expect two-wheelers to become cheaper by Rs 10,000 to Rs 20,000, while car prices could fall by up to Rs 50,000. During the festive season, Uttar Pradesh alone may see sales of 40,000 additional vehicles.
Industry bodies have welcomed the reforms for their long-term impact. CII UP Chairperson Upasana Arora said: “Removing GST from health and life insurance premiums will bring more people under medical security. The reforms will strengthen demand and supply chains.”
CII UP vice chairperson and Avadh Rail Infra MD Abhishek Sarraf added that the changes would expand MSME manufacturing capacity and boost GDP.
According to GST revenue data, Uttar Pradesh collected Rs 9,760 crore in July 2025, up 7 percent from last year, and Rs 9,086 crore in August, up 10 percent. In FY 2024-25, the state collected Rs 1.12 lakh crore, ranking sixth nationally and contributing 7 to 9 percent of the country’s GST revenue. Analysts expect short-term revenue loss of about Rs 3,500 crore, but say stronger demand and better compliance will close the gap in the long run.
Not all sectors, however, are equally pleased. The garment industry has voiced anger over the increase in GST on ready-made clothes priced above Rs 2,500, which has gone up from 12 percent to 18 percent. Ashok Motiani, president of the Uttar Pradesh Garment Industry Association, said, “Clothing is a basic necessity, not a luxury. This hike is unfair and has hurt traders across the country.” He urged the government to roll back the increase and restore the rate to 5 percent.
