India cuts GST to boost sustainability and green economy

In a decisive move to promote environmental sustainability, the Indian government has rationalized Goods and Services Tax (GST) rates on waste management services, biodegradable products, and green transportation. The reforms, aligned with initiatives like ‘Viksit Bharat 2047’ and the LiFE (Lifestyle for Environment) campaign, support India’s Net Zero 2070 target and commitments under the Paris Agreement .

GST on services provided by Common Effluent Treatment Plants (CETPs) has been reduced from 12% to 5% , a step expected to benefit small and medium enterprises (MSMEs) struggling with individual waste treatment costs. With 222 operational CETPs treating 2,212 million liters of industrial wastewater daily across 21 states, the move is estimated to save industries approximately ₹13.27 crore per day . The reduction also supports 53 CETPs already implementing Zero Liquid Discharge (ZLD) systems , promoting treated wastewater reuse and reducing dependence on freshwater.

To reinforce the ban on single-use plastics, GST on biodegradable bags has been slashed from 18% to 5% . The price of compostable carry bags is expected to fall by roughly 11% , from ₹200/kg to ₹178/kg, making eco-friendly alternatives competitive with conventional plastics. The measure supports over 200 certified manufacturers of starch-based compostable products and aids Ministry-led coastal cleanup drives by limiting plastic leakage into rivers and oceans.

GST on buses and commercial goods vehicles has been reduced from 28% to 18% . Lower costs encourage operators to replace older, polluting vehicles with BS-VI compliant models , which are up to 10 times cleaner than BS-IV vehicles. The reform also allows the deployment of more buses, improving public transport and last-mile connectivity, while reducing the carbon footprint of the logistics sector.

These GST reforms are designed to make waste management, biodegradable products, and green mobility more accessible and affordable. By reducing costs and supporting sustainable industries, the government aims to reinforce India’s leadership in climate action and lay the foundation for a cleaner, healthier future.