Dear Members,
Exploring GST 2.0 – A Reform That Strengthens India’s Growth Story and What It Means for the Indian Rubber Industry!
The Central Government announced a rationalization in GST in a landmark reform GST 2.0, on September 3, 2025, simplifying an intricate five-slab tax system into a streamlined structure of 5% and 18%, with a separate 40% “sin/luxury” rate for select items. These changes will come into force from September 22, just in time for the festive season. The government carefully considered all industry sectors and needs of public at large.
This reform is a big win for industries and consumers alike. These benefits will reach end consumers, spurring domestic demand and easing stress in export supply chains. The automobile sector will see a boost, gushing benefits to the tyre industry.
For our industry, the implications are highly encouraging: Rubber thread and cord, previously taxed at 12%, move to 5%, enhancing value across fragmented supply chains. Pneumatic rubber tyres, previously at 28%, now fall under the 18% slab, boosting competitiveness in automotive applications. The GST rates on certain automobile parts which were previously charged at 28% now same will be reduced to 18%. Now there will be main two slabs, 5% and 18%, instead of earlier five slabs.
All India Rubber Industries Association has consistently advocated for uniform GST treatment for rubber and thermoplastic automotive components, and we welcome these reforms as a step forward in that direction.
These changes will:
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Make Indian rubber products more competitive globally by lowering production costs.
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Boost demand across automotive and mobility sectors, cascading benefits to tyre manufacturers and the natural rubber ecosystem.
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Support MSMEs and small traders, reducing compliance burdens and promoting ease of doing business.
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Open opportunities in healthcare, infrastructure, and exports, where lower GST rates on components and medical devices create new demand.
Beyond rate rationalization, GST 2.0 also addresses several progressive measures to strengthen the GST framework and support industry growth. These include the establishment of the Goods and Services Tax Appellate Tribunal (GSTAT) for quicker dispute resolution, risk-based provisional refunds for zero-rated supplies and inverted duty structures and amendments enabling refunds for low-value export consignments. A simplified GST registration scheme for small and low-risk businesses has also been proposed, along with amendments to Sections 15 and 34 of the CGST Act, 2017, regarding post-sale discounts.
Collectively, these reforms are measured to enhance trust, transparency, and ease of doing business under the GST regime, while ensuring much-needed relief and efficiency for industry participants.
All India Rubber Industries Association is committed to guiding members through these changes. We hope these reforms will boost and strengthens India’s growth story while reinforcing our collective vision.
Warm Regards,
Shashi Kumar Singh
President, AIRIA