Hyderabad: The Centre’s latest data released on Tuesday revealed that GST rate cuts have significantly propelled Telangana’s economic growth by lowering costs, boosting competitiveness, and widening market access across diverse sectors, including food processing, pharmaceuticals, aerospace, defence, automobiles, and handicrafts.
The report emphasised that the tax reforms have strengthened the state’s industrial base, supported job creation, and aligned with Telangana’s vision of inclusive development.
Telangana, which processes nearly 25 per cent of its agricultural output through over 4,000 factories and 80,000 informal units, recorded a 6-7 per cent reduction in the prices of processed foods following the GST cuts. Processed foods now account for more than half of the state’s agricultural export value in 2023-24.
Food clusters in Hyderabad, Medak, Warangal, and Nizamabad are thriving, driven largely by MSMEs. Lower GST rates on packaged paneer, ghee, dry fruits, fruit juices, namkeen, pasta, and GI-tagged Banaganapalle Mangoes and Tandur Redgram have enhanced affordability, expanded markets, and improved farmer incomes, while stimulating procurement during peak seasons. The reforms have made Telangana’s agro-based industries more competitive, particularly in rural and semi-urban markets.
In the life sciences and pharmaceutical sector, Telangana continues to lead nationally, with more than 800 life sciences firms employing about 4.5 lakh people since 2014. Hyderabad — widely known as India’s “Life Sciences Capital” — accounts for nearly half of the country’s bulk drug exports and one-third of pharmaceutical production.
The GST reduction — from 12 per cent to nil on 30 cancer drugs and from 12 per cent to 5 per cent on all medicines for personal use — has provided a 6-7 per cent invoice relief, making healthcare more affordable. The tax cuts have also enhanced research and manufacturing competitiveness, benefiting major firms such as Dr. Reddy’s Laboratories, Aurobindo Pharma, and GSK.
Hyderabad’s aerospace and defence manufacturing ecosystem, which is home to DRDO, BDL, MDN, DMRL, and over 1,000 MSMEs, has gained new momentum. Exports of aircraft, spacecraft, and related components constituted nearly 31 per cent of Telangana’s total exports in 2024-25. The rationalisation of GST rates on drones, tanks, and critical defence parts has reduced production costs, improved R&D investment, and boosted both domestic and export competitiveness.
In the automobile sector, Telangana exported auto components worth Rs 177 crore and cars worth Rs 79 crore during 2023-24. GST rate reductions on small cars, motorcycles, and components have lowered production costs and strengthened the supply chain ecosystem. Hyderabad and Ranga Reddy districts, hosting key players like Mahindra and Hyundai, are fast emerging as major automobile manufacturing hubs.
Traditional crafts and toys, too, have gained from GST rationalisation. Telangana’s GI-tagged handicrafts — Nirmal toys, Pembarthi metalware, Adilabad Dokra, and Warangal durries — have seen a six per cent drop in retail prices after the GST rate was cut from 12 per cent to five per cent.
The reduced rates have spurred sales, boosted artisan incomes, and enhanced export potential. Artisans from Adilabad and Jangaon districts have reported higher demand from trade fairs and e-commerce platforms, while Warangal durries — exported to Europe, Japan, and the US — are witnessing renewed international interest.
The report concluded that GST rationalisation has made Telangana’s industries more cost-efficient, globally competitive, and employment-oriented. “By easing the tax burden on essential goods and services, these reforms have opened new avenues for sustainable industrial expansion,” it stated.
