India’s push towards sustainability and climate action has received a significant boost through recent GST rationalisation measures, aimed at promoting eco-friendly manufacturing, strengthening waste management infrastructure, and accelerating green mobility.

Introduced under the leadership of Prime Minister Narendra Modi, these reforms align with key national initiatives such as Viksit Bharat 2047 and the LiFE (Lifestyle for Environment) movement, while supporting India’s Net Zero 2070 targets and commitments under the Paris Agreement.

Boost to waste management infrastructure

A key reform includes the reduction of GST on services provided by Common Effluent Treatment Plants (CETPs) from 12 per cent to 5 per cent. This move is expected to ease the financial burden on MSMEs, making collective waste treatment more accessible.

With over 220 CETPs operational across 21 states, treating more than 2,200 MLD of industrial wastewater, the tax cut is estimated to deliver significant daily cost savings for industries. It also supports circular economy practices, particularly among facilities adopting Zero Liquid Discharge (ZLD) systems, encouraging water reuse and reducing dependence on freshwater resources.

Push for biodegradable alternatives

To combat plastic pollution, GST on biodegradable bags has been reduced from 18 per cent to 5 per cent. This is expected to lower prices and make eco-friendly alternatives more competitive compared to traditional plastic.

The move is likely to support over 200 certified compostable product manufacturers and contribute to ongoing environmental initiatives such as coastal clean-up drives by reducing plastic waste entering ecosystems.

Green mobility gets a lift

GST on buses and commercial goods vehicles has been reduced from 28 per cent to 18 per cent, aiming to modernise India’s transport fleet and reduce emissions.

Lower costs are expected to accelerate the replacement of older, polluting vehicles with cleaner BS-VI compliant models, improve public transport availability, and enhance logistics efficiency while lowering the sector’s carbon footprint.

Overall, these GST reforms are designed to make sustainable solutions more affordable and accessible, strengthening India’s position in the global fight against climate change while paving the way for a cleaner and more sustainable future.