{"id":10019,"date":"2025-10-30T16:58:38","date_gmt":"2025-10-30T11:28:38","guid":{"rendered":"https:\/\/theeducationoverview.in\/?p=10019"},"modified":"2025-10-30T16:58:38","modified_gmt":"2025-10-30T11:28:38","slug":"gst-rationalisation-from-coffee-farms-to-tech-hubs-boosting-karnatakas-growth-story","status":"publish","type":"post","link":"https:\/\/theeducationoverview.in\/?p=10019","title":{"rendered":"GST Rationalisation: From Coffee Farms to Tech Hubs, Boosting Karnataka\u2019s Growth Story"},"content":{"rendered":"
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GST Rationalisation: From Coffee Farms to Tech Hubs, Boosting Karnataka\u2019s Growth Story<\/strong><\/span><\/h2>\n

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Posted On: 24 OCT 2025 9:59AM by PIB Delhi<\/strong><\/span><\/div>\n
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Key Takeaways<\/strong><\/span><\/p>\n

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  • Coffee boost\u00a0with\u00a071% of India\u2019s output;\u00a0GST cut to 5%\u00a0to make instant coffee\u00a011\u201312% cheaper\u00a0and strengthen small growers and exporters.<\/strong><\/span><\/li>\n
  • Dairy relief for 26 lakh farmers, as\u00a0milk and paneer\u00a0become tax-free and ghee and butter 5\u20137% cheaper.<\/strong><\/span><\/li>\n
  • Coastal push\u00a0with GST cut to 5% on\u00a0cashew, coir, and marine products, benefiting women-led MSMEs and coastal livelihoods.<\/strong><\/span><\/li>\n
  • Industrial lift as tractors, machinery, cement, and granite\u00a0become 6\u20138% cheaper, boosting rural mechanisation and construction jobs.<\/strong><\/span><\/li>\n
  • Crafts and innovation\u00a0gain with GST down to 5% on\u00a0Ilkal sarees, Bidriware, rosewood inlay, and drones,\u00a0supporting artisans and tech startups.<\/strong><\/span><\/li>\n<\/ul>\n<\/div>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n

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    Introduction<\/strong><\/span><\/p>\n

    Karnataka\u00a0stands at the\u00a0crossroads of tradition and technology, a state where the aroma of Coorg\u2019s coffee plantations meets the hum of industrial machinery from Peenya to Hosur. From the\u00a0coastal fisheries of Dakshina Kannada\u00a0to the\u00a0craft clusters of Mysuru and Bidar, the state\u2019s economy reflects\u00a0India\u2019s diversity, resilience, and entrepreneurial spirit.<\/strong><\/span><\/p>\n

    The recent\u00a0GST rate rationalisation\u00a0marks a\u00a0major milestone\u00a0for Karnataka\u2019s economy, offering\u00a0relief across agriculture, manufacturing, and services. By reducing tax rates on key goods such as\u00a0coffee, dairy, garments, handicrafts, coir, and essential industrial inputs, the reforms are set to\u00a0enhance affordability, stimulate domestic demand, and strengthen the competitiveness of\u00a0MSMEs and exporters\u00a0alike.<\/strong><\/span><\/p>\n

    With the new structure, Karnataka\u2019s\u00a0farmers, artisans, and entrepreneurs\u00a0stand to benefit from\u00a0lower compliance costs, stronger value chains, and expanded market access. The rationalisation aligns with India\u2019s broader goal of\u00a0simplifying taxation\u00a0while reinforcing\u00a0Karnataka\u2019s vision of inclusive, innovation-led, and sustainable growth.<\/strong><\/span><\/p>\n

    Agriculture & Rural Livelihoods<\/strong><\/span><\/p>\n

    Coffee<\/strong><\/span><\/p>\n

    Karnataka is the heart of India\u2019s coffee economy, contributing around\u00a071% of the country\u2019s total output, with plantations concentrated in\u00a0Kodagu, Chikkamagaluru and Hassan. The sector is dominated by\u00a0small and marginal growers, who form part of the\u00a06.7 lakh individuals\u00a0engaged in coffee cultivation and processing nationally, the majority based in Karnataka\u2019s Malenadu region.<\/strong><\/span><\/p>\n

    The recent\u00a0GST reduction from 18% to 5%\u00a0on\u00a0coffee extracts, essences and instant coffee\u00a0is a major fiscal boost, expected to\u00a0cut retail prices by 11\u201312%. The change will stimulate domestic demand, improve margins for small processors and cooperatives, and narrow the gap between India\u2019s and global per capita coffee consumption.<\/strong><\/span><\/p>\n

    Karnataka\u2019s shade-grown Arabica and Robusta varieties, including\u00a0Coorg Arabica, Chikmagalur Arabica and Bababudangiris Arabica, all\u00a0GI-tagged, enjoy strong export demand in\u00a0Italy, Germany and Switzerland. The rate cut strengthens the competitiveness of Karnataka\u2019s producers in both domestic and global markets.<\/strong><\/span><\/p>\n

    Dairy<\/strong><\/span><\/p>\n

    Karnataka\u2019s dairy sector, led by the\u00a0Karnataka Milk Federation (KMF), is a cornerstone of the rural economy, supporting over\u00a026 lakh milk producers, most of them small and marginal farmers. With over\u00a015,000 primary dairy cooperative societies\u00a0across the state, including\u00a0major processing hubs in Bengaluru, Mysuru, Hassan and Tumakuru, the\u00a0sector provides livelihoods\u00a0to around\u00a022 lakh people\u00a0in rural and semi-urban areas.<\/strong><\/span><\/p>\n

    KMF\u2019s flagship brand\u00a0Nandini has become a symbol of cooperative success, connecting rural producers with urban consumers. In\u00a0FY24, Karnataka produced 13.46 million tonnes of milk, while\u00a0KMF sold an average of 52.7 lakh litres per day, ranking it\u00a0India\u2019s second-largest dairy cooperative.<\/strong><\/span><\/p>\n

    The recent\u00a0GST cuts, from 5% to nil\u00a0on\u00a0UHT milk and paneer, and from\u00a012% to 5% on ghee and butter, will\u00a0lower retail prices by 5\u20137%, boost demand for value-added products, and strengthen cooperative margins. This dual benefit enhances consumer affordability while enabling KMF to offer better and more stable prices to its farmer members, reinforcing dairy as a driver of rural income and women\u2019s empowerment in Karnataka.<\/strong><\/span><\/p>\n

    \"\"<\/strong><\/span><\/p>\n

    Coastal and Cottage Industries<\/strong><\/span><\/p>\n

    Cashew<\/strong><\/span><\/p>\n

    The coastal districts of\u00a0Dakshina Kannada and Udupi\u00a0are\u00a0Karnataka\u2019s main hubs for cashew processing, a labour-intensive industry\u00a0employing thousands of women\u00a0from rural and socially weaker communities. Dakshina Kannada alone houses around\u00a066 processing units, forming a vital part of the local economy.<\/strong><\/span><\/p>\n

    With\u00a0GST on processed cashew nuts reduced from 12% to 5%, prices are expected to fall by\u00a06\u20137%, improving margins for small processors and exporters.\u00a0India is a major global player in the cashew trade, exporting cashew kernels to destinations including the\u00a0UAE, Japan, and the Netherlands. The move is expected to boost domestic demand and enhance income stability for Karnataka\u2019s coastal women workforce.<\/strong><\/span><\/p>\n

    Coir<\/strong><\/span><\/p>\n

    The\u00a0coir industry, spread across\u00a0Tumakuru, Hassan, Chikkamagaluru, and coastal Karnataka, is a traditional cottage-scale sector that provides crucial non-farm rural employment, particularly for women. Supported by the\u00a0Karnataka State Coir Development Corporation\u00a0and the\u00a0Central Coir Board, it plays a key role in women\u2019s empowerment and rural livelihood generation.<\/strong><\/span><\/p>\n

    Nationally, the coir industry\u00a0employs around 5.5 lakh people, and Karnataka, as a major coconut-producing state, has significant potential for expansion.\u00a0India is also the world\u2019s largest producer and exporter of coir products, mainly to the\u00a0USA and China. The\u00a0GST reduction from 12% to 5%\u00a0on coir mats, rugs, and geotextiles is expected to make them\u00a06\u20137% cheaper, boosting competitiveness against synthetic alternatives.<\/strong><\/span><\/p>\n

    This reform supports the circular and\u00a0green economy, promoting\u00a0eco-friendly products\u00a0made from coconut husk and encouraging\u00a0MSMEs to scale operations. It also has the potential to create significant additional non-farm employment, particularly for women, in alignment with national job creation programmes such as the\u00a0Prime Minister\u2019s Employment Generation Programme (PMEGP).<\/strong><\/span><\/p>\n

    Fisheries<\/strong><\/span><\/p>\n

    Karnataka\u2019s\u00a0320 km coastline, spanning\u00a0Dakshina Kannada, Udupi, and Uttara Kannada, sustains thousands of traditional fishing families and a robust seafood processing industry that\u00a0provides significant employment, especially for women. The sector\u00a0supports lakhs of fishermen and workers engaged in processing plants, cold storage units, and export houses along the coast.<\/strong><\/span><\/p>\n

    Karnataka ranks 5th in India\u2019s marine fish production. While much of the catch is consumed domestically, there is growing demand for processed and preserved seafood such as canned, frozen, and ready-to-eat products in both domestic and international markets.<\/strong><\/span><\/p>\n

    The\u00a0GST reduction from 12% to 5% on processed fish and marine products\u00a0is expected to make items like canned tuna, frozen shrimp, and ready-to-eat fish curries around\u00a06\u20137% cheaper, boosting value addition within the fisheries value chain. This policy shift encourages local processing, creating more stable employment opportunities and reducing dependence on volatile export markets.<\/strong><\/span><\/p>\n

    By enhancing competitiveness for seafood MSMEs and cooperatives, the reform provides a direct boost to coastal livelihoods, helping Karnataka\u2019s fishing communities capture greater value from one of the state\u2019s most vital natural resources.<\/strong><\/span><\/p>\n

    Agricultural Machinery<\/strong><\/span><\/p>\n

    The GST reduction on\u00a0tractors, agricultural machinery, and components\u00a0marks a major step toward enhancing rural productivity and industrial growth in Karnataka. With over\u00a078 lakh farmers, mostly small and marginal landholders, the\u00a0rate cut from 12% to 5% on tractors and machinery\u00a0and from\u00a018% to 5% on tractor parts\u00a0will significantly reduce the cost of farm mechanisation.<\/strong><\/span><\/p>\n

    For example, on a tractor priced at \u20b98 lakh, the GST component now drops from \u20b996,000 to \u20b940,000, a direct saving of about \u20b956,000 for the farmer. This makes essential equipment more accessible to farmers, Farmer Producer Organisations (FPOs), and custom hiring centres, supporting mechanisation and higher productivity.<\/strong><\/span><\/p>\n

    Karnataka\u2019s industrial clusters in\u00a0Hubli-Dharwad, Belagavi, and the Bengaluru\u00a0automotive corridor will also benefit, as the state hosts a strong network of MSMEs manufacturing tractor parts and machinery components. The broader auto component industry is well represented in Karnataka, home to Toyota, TVS, Bosch, and several ancillary industries.<\/strong><\/span><\/p>\n

    The demand for farm machinery, closely tied to agricultural performance, is expected to rise under the new GST structure, driving both industrial employment (over 55,000 workers) and rural incomes. By linking affordable mechanisation with stronger manufacturing ecosystems, the reform creates a virtuous cycle of rural and industrial growth across Karnataka.<\/strong><\/span><\/p>\n

    Manufacturing & Industrial Growth<\/strong><\/span><\/p>\n

    Textiles and Garments<\/strong><\/span><\/p>\n

    The\u00a0ready-made garment (RMG)\u00a0and textile sector is one of\u00a0Karnataka\u2019s largest employment generators, with\u00a0major hubs in Bengaluru, Ballari, Hubli\u2013Dharwad, and Mandya. Bengaluru, known as the\u00a0\u201cGarment Capital of India\u201d, houses over\u00a0400 apparel units\u00a0and serves as a sourcing hub for global brands such as\u00a0Tommy Hilfiger, Nike, and Adidas.<\/strong><\/span><\/p>\n

    The industry provides livelihoods to about\u00a0six lakh people, making it the\u00a0second-largest textile employer in India. A majority of workers are women, many from rural and low-income backgrounds. Karnataka\u00a0accounts for 20% of India\u2019s garment production\u00a0and\u00a011% of textile exports, valued at approximately\u00a0\u20b94,000 crore, with the\u00a0United States as a leading destination.<\/strong><\/span><\/p>\n

    Under the new GST structure, the value threshold for the\u00a05% rate\u00a0has been increased from \u20b91,000 to \u20b92,500 per piece, offering major relief to MSME apparel units. The reform lowers the tax burden across a wider product range, boosts price competitiveness, and enhances working capital for domestic manufacturers. It is expected to strengthen Karnataka\u2019s export-oriented garment clusters, improve women\u2019s employment, and stimulate demand across the state\u2019s textile value chain, from spinning in\u00a0Davangere and Belagavi\u00a0to apparel production in\u00a0Bengaluru and Ballari.<\/strong><\/span><\/p>\n

    Granite<\/strong><\/span><\/p>\n

    Karnataka is a major powerhouse in India\u2019s\u00a0granite industry, with quarrying and processing clusters in\u00a0Ramanagara, Chamarajanagar, Ballari, Koppal, and Raichur. The sector provides substantial employment to quarry workers, machine operators, and logistics staff, many of whom belong to marginalized and tribal communities.<\/strong><\/span><\/p>\n

    The state\u00a0contributes nearly 32% of India\u2019s total granite exports, making it a\u00a0key player in the global market. India exports granite primarily to\u00a0China\u00a0as the main destination for raw blocks. The\u00a0GST reduction from 12% to 5%\u00a0on granite blocks will lower input costs for processing units by\u00a06\u20137%, directly improving margins for small and medium enterprises.<\/strong><\/span><\/p>\n

    This cost advantage is expected to enhance the price competitiveness of Indian granite against global producers like\u00a0Brazil and Norway, while encouraging greater investment in modern machinery, safety, and environmental standards across Karnataka\u2019s quarrying regions.<\/strong><\/span><\/p>\n

    Cement<\/strong><\/span><\/p>\n

    Karnataka\u2019s cement industry, concentrated in\u00a0Kalaburagi and Ballari, is a cornerstone of industrial development in\u00a0North Karnataka, benefiting from rich limestone reserves. The sector employs thousands of skilled and semi-skilled workers, including engineers, technicians, and logistics personnel, and supports a wide network of ancillary services.<\/strong><\/span><\/p>\n

    With major players such as\u00a0Ultratech Cement and ACC, Karnataka is a key supplier to the construction and infrastructure sectors across South India. The\u00a0GST reduction from 28% to 18%\u00a0on cement is among the most significant policy measures, expected to\u00a0reduce retail prices by 7\u20138%.<\/strong><\/span><\/p>\n

    This major cost relief will lower input costs for housing, real estate, and public infrastructure projects, while boosting demand for building materials. The resulting expansion in construction activity is expected to generate broad-based employment for both skilled and unskilled workers and act as a powerful multiplier for economic growth across Karnataka\u2019s industrial and construction ecosystem.<\/strong><\/span><\/p>\n

    Sandalwood and Soaps<\/strong><\/span><\/p>\n

    Karnataka\u2019s legacy with sandalwood is timeless, embodied in the\u00a0world-famous Mysore Sandal Soap\u00a0produced by the\u00a0state-owned Karnataka Soaps and Detergents Limited (KSDL)\u00a0in Bengaluru. Using sandalwood oil sourced from across the state, over which\u00a0KSDL holds a historical monopoly, the brand remains a symbol of Karnataka\u2019s craftsmanship and heritage.<\/strong><\/span><\/p>\n

    Granted\u00a0GI status, Mysore Sandal Soap\u00a0contributes nearly 75% of KSDL\u2019s turnover. The\u00a0GST cut from 18% to 5%\u00a0is expected to\u00a0lower retail prices by 11\u201312%, enhancing competitiveness in a market dominated by large FMCG players. The reform will help boost sales, strengthen profitability, and support modernisation and product diversification, ensuring this iconic brand continues to represent Karnataka globally.<\/strong><\/span><\/p>\n

    Drones<\/strong><\/span><\/p>\n

    Bengaluru is the centre of India\u2019s drone manufacturing, R&D, and services ecosystem, home to both established aerospace firms and a vibrant network of technology startups. The sector employs skilled engineers, software developers, and technicians, contributing to high-value innovation and industrial diversification.<\/strong><\/span><\/p>\n

    Karnataka was the first state in India to introduce an aerospace policy, identifying the sector\u2019s high investment potential. The presence of\u00a0major R&D and manufacturing institutions\u00a0such as\u00a0Hindustan Aeronautics Limited (HAL)\u00a0and\u00a0ISRO\u00a0has helped build a strong technical base supporting drone innovation.<\/strong><\/span><\/p>\n

    The\u00a0GST reduction\u00a0on unmanned aircraft (drones) from\u00a018%\/28% to 5%\u00a0represents a significant fiscal incentive, lowering the cost of domestically manufactured drones by\u00a011\u201320%. This move is expected to enhance competitiveness against imports and accelerate adoption in key areas such as\u00a0agriculture, logistics, infrastructure monitoring, and defence.<\/strong><\/span><\/p>\n

    The reform strengthens Karnataka\u2019s position as a leading centre for drone innovation and manufacturing, fostering job creation, technology advancement, and alignment with the\u00a0\u2018Make in India\u2019\u00a0initiative.<\/strong><\/span><\/p>\n

    \\<\/p>\n

    Handicrafts and Cultural Economy<\/strong><\/span><\/p>\n

    Ilkal & Udupi Handloom Sarees<\/strong><\/span><\/p>\n

    Karnataka\u2019s weaving heritage is best represented by the clusters of\u00a0Ilkal (Bagalkot) and Udupi, where traditional artisan communities have practiced handloom weaving for generations. The sector\u00a0supports around 55,000 weaver families, many of whom work from home-based units or cooperative societies, often facing challenges from fluctuating yarn prices and competition from power looms.<\/strong><\/span><\/p>\n

    Both\u00a0Ilkal and Udupi sarees enjoy Geographical Indication (GI) status, Ilkal sarees are renowned for their distinctive\u00a0Tope Teni weaving technique\u00a0that joins the body and pallu warp, along with their signature red silk pallus, while Udupi sarees are prized for their fine cotton and traditional motifs.<\/strong><\/span><\/p>\n

    With\u00a0GST reduced from 12% to 5%\u00a0on handloom sarees, prices are expected to become\u00a06\u20137% lower, improving their competitiveness against mass-produced alternatives. The reform is expected to boost sales through cooperatives, government emporiums, private retailers, and online platforms, thereby improving weaver incomes and helping sustain Karnataka\u2019s centuries-old handloom traditions.<\/strong><\/span><\/p>\n

    Bidriware<\/strong><\/span><\/p>\n

    Originating exclusively from\u00a0Bidar,\u00a0Bidriware is one of India\u2019s finest metal handicrafts, known for its intricate inlay of pure silver wire on a blackened alloy of zinc and copper, created using special soil from the\u00a0Bidar Fort. Recognised with a\u00a0GI tag, Bidriware represents a living legacy of craftsmanship passed down through generations of traditional artisan families.<\/strong><\/span><\/p>\n

    The industry remains a vital source of skilled employment in the Bidar region, but low remuneration and competition from machine-made products have placed economic strain on artisans. The\u00a0GST reduction from 12% to 5%\u00a0offers a\u00a06\u20137% price advantage, making these handcrafted artefacts more affordable and competitive in both domestic and tourist-driven export markets.<\/strong><\/span><\/p>\n

    With\u00a0Bidriware exported to over 90 countries, the reform is expected to improve profitability for artisans and revive interest in this heritage craft, helping sustain livelihoods while preserving\u00a0Karnataka\u2019s centuries-old metal artistry.<\/strong><\/span><\/p>\n

    Mysore Rosewood Inlay<\/strong><\/span><\/p>\n

    Practised by highly skilled, family-based artisan clusters in and around Mysuru, the\u00a0Mysore Rosewood Inlay craft is a hallmark of Karnataka\u2019s royal heritage. Patronised by the\u00a0Wodeyar dynasty and Tipu Sultan, this exquisite art form\u00a0involves embedding coloured woods, mother-of-pearl, and other eco-friendly materials into rosewood surfaces\u00a0to create decorative furniture and fine artefacts. Historically, ivory was used, but it has since been replaced with sustainable alternatives.<\/strong><\/span><\/p>\n

    Granted\u00a0GI status in 2005, the craft remains a core part of Mysuru\u2019s cultural ecosystem. Sales are driven by Cauvery Handicrafts emporiums, private galleries, and\u00a0niche exports to the US and UK, with international demand also emerging through online platforms.<\/strong><\/span><\/p>\n

    The\u00a0GST reduction from 12% to 5%\u00a0is expected to\u00a0lower prices by 6\u20137%, improving affordability and competitiveness. For example, a rosewood dining set priced at $4,000 could see savings of over $250. This fiscal relief will enhance profitability for small, family-run enterprises, strengthening Mysuru\u2019s position in the global market for bespoke, high-value wooden art.<\/strong><\/span><\/p>\n

    \"\"<\/strong><\/span><\/p>\n

    Conclusion<\/strong><\/span><\/p>\n

    The\u00a0GST\u00a0reforms provide\u00a0broad-based benefits across Karnataka\u2019s diverse economy, from farmers cultivating coffee, dairy, and cashew to artisans engaged in handlooms and handicrafts, and entrepreneurs driving industrial and technological growth.\u00a0Lower tax rates will reduce costs, improve market competitiveness, and support greater value addition across key sectors, enhancing income opportunities for both rural and urban communities.<\/strong><\/span><\/p>\n

    By\u00a0strengthening the link between traditional livelihoods and modern industries, the rationalisation fosters\u00a0inclusive, employment-oriented, and sustainable development. These reforms are expected to boost productivity, stimulate domestic demand, and further consolidate Karnataka\u2019s position as\u00a0one of India\u2019s most dynamic and innovation-driven state economies.<\/strong><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

    GST Rationalisation: From Coffee Farms to Tech Hubs, Boosting Karnataka\u2019s Growth Story Posted On: 24 OCT 2025 9:59AM by PIB Delhi Key Takeaways Coffee boost\u00a0with\u00a071% of India\u2019s output;\u00a0GST cut to 5%\u00a0to make instant coffee\u00a011\u201312% cheaper\u00a0and strengthen small growers and exporters. Dairy relief for 26 lakh farmers, as\u00a0milk and paneer\u00a0become tax-free and ghee and butter 5\u20137% …<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-10019","post","type-post","status-publish","format-standard","hentry","category-education-news"],"_links":{"self":[{"href":"https:\/\/theeducationoverview.in\/index.php?rest_route=\/wp\/v2\/posts\/10019","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/theeducationoverview.in\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/theeducationoverview.in\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/theeducationoverview.in\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/theeducationoverview.in\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=10019"}],"version-history":[{"count":1,"href":"https:\/\/theeducationoverview.in\/index.php?rest_route=\/wp\/v2\/posts\/10019\/revisions"}],"predecessor-version":[{"id":10021,"href":"https:\/\/theeducationoverview.in\/index.php?rest_route=\/wp\/v2\/posts\/10019\/revisions\/10021"}],"wp:attachment":[{"href":"https:\/\/theeducationoverview.in\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=10019"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/theeducationoverview.in\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=10019"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/theeducationoverview.in\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=10019"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}