A wave of economic reform is sweeping through Jammu and Kashmir, with the recent reduction in Goods and Services Tax (GST) rates from 12% to 5% set to invigorate the region’s handicrafts, agriculture, tourism, and specialty products. The policy shift is expected to enhance competitiveness, stimulate demand, and bolster livelihoods across the union territory, aligning with its ambitions of industrial diversification, tourism promotion, and rural upliftment.
The handicraft and handloom sectors, long the cornerstone of J&K’s economy, stand to gain significantly from the tax relief. These labour-intensive industries, which employ over 3.5 lakh people, including a substantial 45% women, are renowned for products like Pashmina shawls, silken carpets, papier-mâché, and wood carvings. The lowered GST rate is anticipated to make these heritage crafts more affordable, boosting sales in domestic and international markets while preserving cultural identity. Notably, the iconic GI-tagged Pashmina shawls, crafted by nearly 5,000 weavers in Kanihama, are poised to see increased demand and export potential, safeguarding both livelihoods and tradition against machine-made imitations.
Similarly, the wicker willow and papier-mâché industries, concentrated in Srinagar, Budgam, and Ganderbal, are expected to benefit from reduced compliance burdens and enhanced market competitiveness. The GST cut also extends to Basohli paintings, a GI-tagged art form from Kathua district, often described as “poems in colours.” With nearly 500 artisans involved, the tax relief will make these vibrant artworks more accessible, encouraging wider demand and supporting cultural preservation. Walnut and Cran’s wood crafts, integral to Kashmir’s carpentry tradition in districts like Budgam and Srinagar, will also see improved affordability, driving sales and tourist purchases while sustaining traditional craftsmanship.
In agriculture, J&K’s walnut and almond sectors are set for a significant boost. The region accounts for over 91% of India’s almond production, employing around 5,500 people in processing and packaging hubs across the Kashmir Valley. The GST reduction is expected to lower production costs, making Kashmiri almonds more competitive and spurring value addition within the state. Walnut cultivation, generating trade worth ₹120 crore annually and supporting 10,000 jobs in districts like Anantnag, Kupwara, and Kulgam, will also benefit from increased affordability and export potential, strengthening rural economies.
The tourism sector, a vital contributor to J&K’s economy with over 70,000 jobs and 15% of the state’s GDP, is another key beneficiary. With tourist arrivals rising from 2.1 crore in 2023 to 2.3 crore in 2024, the GST cut on hotel tariffs for stays up to ₹7,500 is expected to make travel more affordable, boosting occupancy and local business revenues. From Jammu’s revered temples to the serene lakes of Kashmir, the region’s appeal as a global tourist destination is set to grow further.
J&K’s culinary heritage also stands to gain, with the GI-tagged Dogra cheese from Udhampur district benefiting from the tax relief. The reduced rate will lower production costs for local dairy producers, enhancing competitiveness in domestic and niche export markets while supporting rural employment.
