Kerala’s food processing sector which employs nearly 30 per cent of the state’s workforce is one of the major beneficiaries of the GST reduction. Fisheries, cashew, coir, Ayurveda, tourism, etc also see six to 11 per cent cost reduction.
Kerala’s economy is deeply rooted in agriculture, marine resources, plantation crops, and artisanal production, with each sector supporting numerous livelihoods. The recent GST reforms, which bring significant rate reductions across key industries, are expected to make products and services more affordable, enhancing export competitiveness and strengthening income opportunities across value chains.
Nearly 30 per cent of the Kerala workforce is dependent on the food processing industry. The recently reduced GST rates on pineapple, mango, and banana-based products benefited the industry, like cashew and coir products. The cashew and coir sectors employ over 6.7 lakh workers in the state. Kerala’s cashew processing industry is primarily located in the Kollam cashew corridor, employing approximately three lakh workers involved in shelling, peeling, and grading at micro-units and cooperatives. The cashew sector caters to domestic snacking and gifting markets, with products now more affordable under the revised GST rates. Private-label contracts continue to drive exports to GCC, the US, and EU retail markets. The rate cut strengthens Kerala’s cashew processors by improving margins and competitiveness.
Besides these, 1.05 million fisherfolk and 4.18 lakh tea workers took home the benefit of the GST rate reduction. After the GST reduction, the prices of spices, coffee, processed fruits and dry fruits fell six to 11 per cent. The state is likely to experience significant growth in tourism and Ayurveda.
From the spice gardens of Idukki and Wayanad to the coir factories of Alappuzha, fisheries clusters of Kochi and Kannur, to the cashew corridor of Kollam, all of Kerala is set to gain. Beyond goods, the reforms extend to services, with tourism, Ayurveda, and wellness industries witnessing tax relief that enhances affordability and global appeal.
The state’s tourism and hospitality sectors, which primarily include Kochi, Alappuzha, Kovalam, Varkala, Munnar, and Wayanad, employ a diverse workforce that includes young people from both coastal and highland communities. Women actively participate in homestays, Ayurveda wellness centres, handicrafts, and food catering. Hotels and homestays that charge up to ₹7,500 are now subject to a five per cent GST rate. Additionally, the tax rates on inputs like toiletries and tableware have been reduced from 18 per cent to five per cent, resulting in an overall cost reduction of approximately 11 per cent. These reductions make stays and services more affordable, enhance profit margins for the industry, and increase Kerala’s attractiveness as a travel destination.
Kerala’s Ayurveda and medicine sector, spread across Thrissur, Kottakkal (Malappuram), and Aluva, supports a wide workforce of herb gatherers, manufacturing workers in Ayurvedic product units, therapists and clinic staff in treatment centres. With Ayurvedic drugs, devices, and products now taxed at five per cent GST, costs are expected to fall by six to eleven per cent, improving affordability. The Ayurveda market covers wellness packages, chronic care, and OTC Ayurveda, catering to domestic patients and foreign wellness tourists. The GST cut will enhance Kerala’s competitiveness as a hub for traditional healthcare and wellness.
