Delhi’s Economy Gets A Push! GST 2.0 Rate Cuts To Aid MSMEs, Trade And Hospitality

New Delhi: The rollout of GST 2.0 rate cuts is set to bring direct relief to Delhi households by lowering their day-to-day expenses. At the same time, the move is expected to boost the city’s economy, as MSMEs, traders, and the hospitality sector gain from reduced input costs, stronger demand, and improved competitiveness.

Widespread Impact Across Delhi Markets

From Karol Bagh’s automobile and apparel shops to the wholesale trade in Sadar Bazar and Khari Baoli, and from Chawri Bazar’s paper hub to the busy streets of Chandni Chowk, the effects of GST 2.0 will be felt everywhere. Alongside this, lower rates on everyday goods and essential services will ease expenses for households across the city.

Delhi’s Auto Hubs Powering North India’s Trade

Delhi has long been a key centre for automotive component trading, with markets like Karol Bagh and Kashmere Gate well-known for their wholesale and retail networks. These family-run businesses and MSMEs not only cater to the city’s massive vehicle population but also supply parts across north India and even export to neighbouring countries. In fact, Delhi’s auto hubs alone trade components worth nearly Rs 1,000 crore every month with Bangladesh. As a result, the city plays a crucial role in India’s auto components industry, which recorded a turnover of Rs 6.14 lakh crore in FY24.

GST Cuts to Make Vehicle Maintenance Cheaper

With GST on auto parts reduced from 28 per cent to 18 per cent, the cost of vehicle maintenance for both consumers and mechanics is expected to drop by nearly 7.8 per cent. Lower prices for spare parts will mean smaller service bills, encouraging vehicle owners to replace worn-out components more regularly. This not only saves money but also helps improve safety and efficiency on Delhi’s roads.

As the national capital, Delhi is a major destination for tourists, business travellers and medical tourism. It offers everything from luxury properties to budget stays in Paharganj and Karol Bagh. In 2024, Delhi’s hotel market recorded about 72.9 per cent average occupancy with an average daily rate (ADR) of nearly Rs 10,273.

The new GST rate of 5 per cent for rooms below Rs 7,500 per night directly reduces the cost of staying in Delhi’s hotels. For example, booking a room at Rs 5,000 per night would now attract an additional tax of only  Rs 250 (5 per cent). This makes hotel stays around 6.25 per cent cheaper. These savings accumulate over a multiple-night stay, which will result in higher occupancy rates.

To complement room-rate relief, key kitchen inputs used by hotels, restaurants, cafes, and caterers have also been cut from 18 per cent to 5 per cent. The 13-percentage-point tax reduction on these crucial kitchen supplies will directly lower the input costs for restaurants and hotels.

Delhi-NCR is the top city for hospitality job opportunities, with a 20.37 per cent increase in job postings in 2022-23. A sustained boost in the sector would translate into increased job creation and better earnings for the large workforce employed in Delhi’s hotels and restaurants.

Delhi is also a massive consumer of milk and dairy products. The city is served by an extensive supply network from cooperatives like Mother Dairy and Amul. Delhi employs thousands of workers in milk processing plants (like the Mother Dairy plant in Patparganj) and as delivery agents or vendors in local markets.

Footwear, eco-friendly furniture, beauty and wellness services, and printing-paper packaging all sit in Delhi’s consumer basket while powering its MSME engine. The GST cut on affordable footwear and finished leather, along with furniture, printing & stationery items, will lower final prices and ease working-capital strain for small traders.

GST on items like bamboo, cane, and rattan furniture is now 5 per cent, improving affordability for households and demand certainty for artisans and small retailers. The furniture sector provides employment to thousands in both formal showrooms and informal workshops across Delhi, with major markets in Kirti Nagar and Panchkuian Road. (With IANS Inputs)