Nomura says rise in imports amid tariff woes likely aided May GST mop-up
This story was originally published at 20:54 IST on 2 June 2025
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NEW DELHI – The surprisingly buoyant goods and services tax collections in May could be due to a sharp increase in imports in recent months, possibly on account of frontloading of exports leading to higher imports of inputs from China and a re-routing of exports through India, according to Nomura.
Data released Sunday showed India's gross GST collections rose to a 31-month high of 16.4% on year at INR 2.011 trillion in May. GST from import revenue rose 25.2% on year to INR 513 billion. GST collections from imports recorded the highest monthly contribution to headline GST growth in nearly three years, Nomura said.
The trade data for April suggested a rise in frontloading of Indian exports to the US and higher imports from China. According to the commerce ministry, India's exports to the US jumped 27.3% on year in April, while imports from China rose 27.1% on year.
Nomura said the GST collections growth of 16.4% in May outpaced tracking nominal GDP growth of 10%. The gross domestic GST revenue grew 13.7% on year in May, suggesting a robust pace in domestic activity in April, Nomura said.
Higher GST collections are a "positive surprise", even though it "contrasts with soft trends" across other high-frequency growth indicators like auto sales, bank credit growth, consumer non-durable goods, and industrial inputs, Nomura said. "We will be closely tracking this divergence in the coming months," Nomura's economists said.
Nomura's baseline view assumes India's GDP growth to moderate to 6.2% in 2025-26 (Apr-Mar) from 6.5% in FY25. Nomura's GDP growth projection is 30 basis points lower than the Reserve Bank of India's forecast of 6.5%. End
Reported by Priyasmita Dutta
Edited by Saji George Titus
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