The implementation of Goods and Services Tax (GST) in 2017 was a watershed moment for India’s traditional makhana industry. It replaced a chaotic web of taxes with a uniform 5% rate, fueling a surge in growth that saw the industry’s value more than double to ₹8.5 billion. While this first phase of reform laid a crucial foundation, now the newly introduced ‘GST 2.0’ promises to be the next transformative wave. It has been positioned to supercharge this sector from a domestic powerhouse to a global superfood champion.
From a 5% Rate to a Seamless Ecosystem
While the current 5% GST on makhana has been a boon, the next-generation reforms are about far more than just rates. The recent move to a streamlined two-tier tax structure of 5% and 18% is a massive step towards reducing complexity and litigation across the board. For the makhana industry, this simplification removes potential classification ambiguities for related products and services, ensuring the entire supply chain operates with greater clarity.
‘The real power of GST 2.0 lies in its commitment to a single, seamless market. It’s not just about a low tax rate on the final product; it’s about eliminating all friction from the entire value chain,’ says a senior economist familiar with the reforms. This institutional clarity will allow businesses to focus on innovation rather than compliance, driving investment and job creation.
Unlocking Working Capital, Fueling Exports
The makhana industry’s export performance, with a remarkable 39% CAGR from 2020 to 2024, is a testament to its global appeal. However, exporters have long faced working capital issues due to delays in GST refund claims. This procedural inefficiency has often been a bottleneck, hindering rapid expansion and the ability to scale.
The new GST 2.0 framework directly addresses this pain point with a streamlined, automated refund mechanism for exporters. By ensuring that refunds are processed quickly and without manual intervention, the government will unlock billions in working capital for makhana businesses. This newfound liquidity will be a game-changer, allowing exporters to invest in state-of-the-art processing facilities, global marketing campaigns, and new product development to compete with international players on a larger scale.
Cultivating the Grassroots with Digital Efficiency
At its core, the makhana story is a story of grassroots empowerment, centred in Bihar. The success of the sector is directly linked to the prosperity of over 5 lakh farmers and the thousands of women-led SHGs involved in processing. While the current GST has formalised a significant portion of the value chain, the next-gen reforms promise to take this a step further.
The push for a more comprehensive digital tax ecosystem will make it easier for smaller processors and farmer collectives to integrate into the formal economy. By simplifying registration and compliance, the new system will encourage more entrepreneurs, particularly women, to launch and grow their businesses. This enhanced digital footprint will lead to greater price discovery and direct market linkages, further boosting farmer income and strengthening Bihar’s dominance as the makhana hub. The new Makhana Board, announced by the government, will be a key facilitator, working in tandem with the GST Council to align policy and support at every level.
The message is clear: the first wave of GST was about stability, but GST 2.0 is about empowerment and efficiency. By building a more robust, transparent, and technology-driven tax system, India is not just fostering economic growth; it is securing the future of its traditional industries and ensuring that the benefits of progress reach the very heart of its rural economy.
- by Clarifeed Editorial Team
