GST Council’s New Reforms Could Boost India’s Auto Manufacturing and Exports – Here’s How

The GST Council has approved a set of reforms aimed at improving working capital, easing input tax credit restrictions, accelerating refunds, simplifying interstate movement of goods and strengthening export competitiveness. The reforms are expected to benefit India's automotive manufacturing ecosystem, including OEMs, component suppliers, EV manufacturers, engineering service providers, exporters and contract manufacturers. The new GST reforms include allowing refunds of accumulated input tax credit relating to input services from November 2026, and refunds on capital goods from April 2027, which can be spread over 60 months. The reforms also propose to allow 90% of the refund amount to be released provisionally, subject to system-based risk assessment. The reforms are expected to improve liquidity, export competitiveness and investment conditions for India's automotive manufacturing ecosystem. They could also make India more attractive for future vehicle and component manufacturing investments. The new reforms do not include a fresh change in GST rates for passenger vehicles.