NEW DELHI: The rationalization of GST rates is poised to initiate a growth cycle for India’s economy, driven by a significant increase in consumption, while also providing essential support against the unfavorable conditions stemming from the ‘lopsided’ tariff regimes advocated by the US, industry leaders remarked on Thursday. The GST Council has approved extensive modifications to the indirect tax framework, limiting the rate slabs to 5 percent and 18 percent effective from September 22, coinciding with the start of Navaratri. Ashok P Hinduja, Chairman of the Hinduja Group of Companies (India), expressed that the announced GST rate reductions across various sectors are favorable for the economy, as they will bolster India’s macroeconomic stability by stimulating demand at the grassroots level.
“This initiative serves as a much-needed consumption enhancer to mitigate the global economic challenges tied to the lopsided tariff structures promoted by the US. It will have a ripple effect positively impacting several related sectors, both upstream and downstream,” he remarked. Mahindra Group Chairman Anand Mahindra took to the social media platform X to advocate for further reforms to stimulate consumption and investment. “We are now engaged in the effort… More rapid reforms are the most effective means to unlock consumption and investment. These, in turn, will grow the economy and amplify India’s presence globally.
However, let’s heed the famous words of Swami Vivekananda: ‘Arise, awake, and stop not till the goal is reached.’ So, more reforms are necessary…,” Mahindra stated in his post. FICCI President Harsha Vardhan Agarwal noted that the simplification of the tax structure will yield numerous advantages. “It will minimize classification disputes, enhance compliance, and rectify issues stemming from the inverted duty structure. While the revenue implications of the proposed measures have been outlined by the government, the key point is the boost in economic sentiment that the reduction in rates will generate, subsequently enhancing consumption demand. This is a significant positive for the economy, both in terms of promoting growth and managing inflation,” he stated.
CII Economic Affairs Council Chairman R Dinesh affirmed that the decrease in GST rates on essential items such as dairy products, medicines, and daily household goods, along with process reforms and institutional enhancements, will directly benefit consumers, the aspiring middle class, and industries alike.