Growth engine revving as GST, auto sales rise despite global roadblocks
Gross goods and services tax (GST) collections rose 13.9% year-on-year to Rs 1.95 lakh in June, driven by strong import-led revenues and higher compliance; which is close to the 2 lakh crore milestone. Automobile sales increased by 24% in June compared to the previous year, and energy consumption increased by 11.6% to 166.5 billion units.
UPI transaction volumes, a measure of economic activity, rose 23% year-on-year last month, while transaction value rose 20%.
To be sure, separately released data showed India’s manufacturing activity fell to a three-month low in June as growth in new business orders and export demand weakened, leading to softer output growth. HSBC Purchasing Managers Index decreased from 55 in May to 54.2 in June. It was 58.4 in June 2025.
The central bank cut its FY27 growth forecast to 6.6% from the previous forecast of 6.9%, citing rising energy costs, Iran-US conflict and supply chain disruptions. Growth is expected to increase by 6.6% in the first quarter, 6.3% in the second quarter, 6.5% in the third quarter and 6.8% in the fourth quarter.
GST collections
Data released by the finance ministry showed that despite trade disruptions, June figures increased gross GST collections in the first quarter to 6.32 lakh crore rupees, up 8.4% from the previous year.
The June cleanup built on May transactions, faced with disruptions to global trade and supply chains due to the Gulf conflict, and strengthened the resilience of domestic economic activity.
“Double-digit monthly growth compared to June 2025 is encouraging even though YTD growth is around 7%… The focus now should be to accelerate domestic economic activity and further increase compliance to sustain this momentum,” said Pratik Jain, partner at Price Waterhouse & Co LLP. Gross domestic GST collections increased by 6.5% year-on-year to Rs 1.35 lakh crore. GST revenue from imports increased by 34.6% to 60,038 billion rupees. Refunds rose 29.1% to Rs 32,436 billion and net GST for the month rose 11.2% to Rs 1.62 billion compared to the same period last year.
“Although the West Asian conflict and its repercussions have dragged on longer than we expected, some signs of improvement are emerging with the decline in crude oil prices. At the same time, the monsoon outlook looks bleak and we do not know how things will turn out,” said Aditi Nayar, chief economist at ICRA.
While domestic collections grew modestly at 2.8% during the quarter, GST on imports grew sharply at 26.2%; This underlined the increasing role of foreign trade in supporting indirect tax revenues. The June collection comprised central GST of Rs 37.376 billion, state GST of Rs 45.116 billion and integrated GST of Rs 1,12,320 billion, including import duties.
keep up the momentum
To be sure, separately released data showed India’s manufacturing activity fell to a three-month low in June as growth in new business orders and export demand weakened, leading to softer output growth. HSBC Purchasing Managers Index decreased from 55 in May to 54.2 in June. It was 58.4 in June 2025.
The central bank cut its FY27 growth forecast to 6.6% from the previous forecast of 6.9%, citing rising energy costs, Iran-US conflict and supply chain disruptions. Growth is expected to increase by 6.6% in the first quarter, 6.3% in the second quarter, 6.5% in the third quarter and 6.8% in the fourth quarter.
“Although the conflict and its repercussions in West Asia will last longer than we expected, some signs of improvement are emerging with the decline in crude oil prices,” said Aditi Nayar, chief economist at Icra. “At the same time, the monsoon outlook looks bleak and we don’t know how things will turn out.”
automobile sales
According to industry estimates, the number of passenger vehicles shipped from factories to dealers rose 24% to 400,000 units in June, from 321,500 a year ago. It increased by 27% in May and 25% in April. Sales data includes electric cars sold in the country.
The growth was supported by strong volumes from market leader Maruti Suzuki, as well as from Tata Motors and Mahindra & Mahindra (M&M), where sales grew by 24%, 67% and 28% respectively.
Despite a week-long maintenance shutdown last month, Maruti Suzuki reported the highest ever wholesale sales in June, said Partho Banerjee, chief marketing and sales officer.
“Despite some headwinds due to the crisis in Iran and lower-than-expected monsoon rainfall so far this year, we are seeing strong traction across both our small car and commercial vehicle ranges,” he said. Banerjee said demand for CNG vehicles was particularly strong last month, accounting for 40% of total sales in June.
