India's supply chain activity reached new heights in October, with e-way bill generation—a key measure of freight movement and economic health—surging to an unprecedented 117.25 million, marking a 17% year-on-year increase, according to data from the Goods and Services Tax Network (GSTN). 

The strong uptick, which reflects heightened trade momentum, aligns with a rise in manufacturing output and retail demand, spurred by the festival season.

This increase in e-way bills—electronic permits required for shipping goods across states—also reflects asignificant rise over September's figures. The festival season, which kicks off in August-September with Raksha Bandhan, Ganesh Chaturthi, and Onam, leads into Navratri, Dussehra, Diwali, and concludes with Christmas at the year's end.

Companies often see another surge in e-way bills toward the financial year-end as they clear inventory to meet targets.

The increase in e-way bills suggests a positive outlook for tax revenues. As a high-frequency economic indicator, e-way bill activity closely tracks broader economic trends, with higher freight volumes often signalling increased economic output.

Riding on festival demand, India's Goods and Services Tax (GST) collections rose to ₹1.87 trillion in October, the second-highest monthly revenue since the GST system's 2017 inception. The figure marks an 8.9% annual increase, following a ₹1.73 trillion collection in September, which had grown 6.5% year-on-year.

"In the last few months, India's e-way collections have been doing exceedingly well," said Manoranjan Sharma, chief economist at Infomerics Ratings, and former chief economist at the Canara Bank.

"This clearly shows that technical glitches, leakages and inadequate coverage are now history. More importantly, it clearly demonstrates the strength and robustness of the India growth story, since the rising e-way collections are often taken as a proxy for the traction in the macroeconomic growth," he added.

GST revenue closely tracks e-way bill activity, as higher freight volumes translate to higher tax inflows. The all-time GST revenue peak of ₹2.1 trillion was set in April, but October's figures underscore a consistent uptrend.

Strong performance in economic indicators

The encouraging e-way bill data aligns with improvements in other economic indicators. Manufacturing activity, as measured by the HSBC India Manufacturing Purchasing Managers Index (PMI), rebounded in October to 57.5, up from September's eight-month low of 56.5, driven by strong domestic and international demand.

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India's services sector also recorded gains, with the PMI reaching 58.5 in October, up from 57.7 in September, extending its 39-month streak above the 50-point threshold that signals growth. In parallel, auto sales—a proxy for consumer demand—showed resilience, with retail sales reaching 2.83 million units in October, up 32% annually, buoyed by strong rural demand and favourable minimum support price (MSP) for rabi crops.

With e-way bill volumes and GST collections on a steady rise, India's tax revenues reflect ongoing improvements in enforcement and compliance. Average monthly GST collections have climbed to ₹1.81 trillion in the current fiscal year, up from ₹1.68 trillion a year earlier.

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Looking ahead, as the GST Council considers tax rate rationalization and supply chains remain active, November's revenue outlook appears robust, reinforcing India's economic momentum.