GST reforms to boost Nagaland’s economy across key sectors

DIMAPUR — Nagaland’s economy—rooted in agriculture, handloom, handicrafts and tourism—is set for a major boost following the latest Goods and Services Tax (GST) reforms announced by the Centre, according to a PIB backgrounder issued on Wednesday.

The rationalisation of tax rates across multiple industries is expected to make local products and services more affordable while improving earnings for artisans, farmers and entrepreneurs across the state, it suggested.

The reforms would empower micro-enterprises and enhance Nagaland’s prospects as a culturally rooted, growing centre for trade and tourism, it added while highlighting the positive impacts across sectors.

Handloom sector

The handloom industry—particularly the GI-tagged Chakhesang shawls produced in Kohima, Phek and Dimapur—employs nearly 44,000 women artisans working on home-based looms.

With GST on handloom textiles reduced from 12% to 5%, products priced up to INR 2,500 will become around 6.25% cheaper.

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It maintained that the price cut would enhance competitiveness and improve weavers’ incomes.

Nagaland’s signature shawls and textiles are already sold in markets across the USA, UAE, Sweden and Canada, apart from domestic cultural fairs.

Tourism and hospitality

“The tourism sector in Nagaland, covering tour operations, hotels, and homestays, is poised to benefit from the GST reforms. The main centres of activity are Kohima, Dimapur, and Kisama’s Hornbill festival, though tourism services are gradually expanding into other districts,” it stated.

The GST on hospitality services has been reduced from 12% to 5%, making hotel tariffs up to INR 7,500 about 6% cheaper.

“This will boost affordability and support wider tourism growth state-wide,” it added.

Bamboo and cane industry

The bamboo and cane sector, employing about 13,000 people through the Nagaland Bamboo Development Agency (NBDA) and various MSMEs, will also benefit.

“The products are used widely in domestic markets, catering to the growing demand for furniture, handicrafts and eco-friendly decor.

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“With the GST rate on furniture and handicrafts reduced from 12% to 5%, prices are expected to fall by 6.25%, increasing affordability and artisanal incomes,” it stated.

Nagaland coffee

Coffee growers across Mokokchung, Wokha, Mon, Zunheboto and Tuensang are set to gain from the reduction in GST—from 12% to 5% on roasted beans and from 18% to 5% on coffee extracts.

“The sector is driven by tribal smallholders cultivating shade-grown plots and a growing number of MSMEs engaged in roasting and retailing. As of 2022-23, there were nearly 2,200 registered coffee growers in Nagaland.

“Nagaland coffee has carved a niche in both domestic and international markets, exporting to countries such as South Africa, Bahrain, UAE, Germany, Italy, Netherlands, and across Southeast Asia. Green beans are typically sold to traders, while roasted beans are supplied to cafes and specialty buyers.

The recent GST reduction is expected to lower overall costs by 6.25% to 11%, making Nagaland coffee more price-competitive and profitable for growers and MSMEs,” it added.