The Goods & Services Tax (GST) which was implemented by the government from August 1, 2017 is without doubt the most significant and path breaking economic reform in the country since independence. It has seamlessly integrated the country into one single market, resulted in ushering in unprecedented efficiencies in our systems and has reduced the cascading effect of multiple taxes, duties and levies on manufactured goods and services.  

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The government’s vision is to double the size of the national economy from the present $2.5 trillion to $5 trillion by 2025. This would make India the third largest economy in the world. To achieve this growth, we would need GDP to grow at about 10% every year for the next 7-8 years. Though achievable, this is undoubtedly a challenging target. 

The ‘One Nation One Tax’ concept which is the key objective of GST has brought about uniformity and formalised trade across the economy. The impact that GST has had on “ease of doing business” has been phenomenal and I am confident that India’s global ranking on this score is bound to improve significantly.

The government has been responsive to industry’s representations on issues such as rate anomalies, disparities etc. As per recent reports, 95% of products are below the 18% GST slab. Though it may not be feasible to introduce a single GST rate, the government has expressed that it may in future be open to rationalise slabs.  Tax collection has reached the record rupees trillion mark, which is an indicator of successful GSI implementation. 

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Implementation of GST is also expected to improve India’s export competitiveness. One of the basic principles of exports is that a country should be exporting only goods and services and not embedded taxes and duties. For a very long time exporters had been pleading with the government to provide them with a level playing field vis-à-vis their international competitors who do not suffer this disadvantage. Though the government through various measures attempted to neutralise the disadvantage, they were really not adequate. With introduction of GST, exporters will be able to claim refunds of most of the embedded taxes and duties. While the process of claiming refunds is still being streamlined, it is clear that Indian exports will gain considerable competitive advantage in international markets.  

In the overall assessment GST is a definite gain to the industry. Business sentiment in the country has already improved significantly in the past year and with global investors also showing renewed interest we can expect the investment cycle to regain momentum. Successful implementation of GST has contributed to growing investor interest in India and we are clearly on the path to become a preferred global investment destination.   

By, Baba Kalyani
(The writer is chairman & MD, Bharat Forge Ltd)