Clipped from: https://www.thehindubusinessline.com/opinion/gst-20-will-boost-growth/article70038895.ece
The reforms are both citizen- and business-friendly
The 56th meeting of the GST Council on September 3 marks one of the most significant milestones since the tax was introduced in 2017. The reforms reflect both the maturity of India’s federal compact and a shared vision to build a simpler, fairer, and more robust tax framework.
The GST Council’s decisions are not limited to rates or structures; they recalibrate GST itself — transforming it into a citizen-centric, growth-enabling instrument that will propel India’s economy forward.
The reduction of GST on tractors, farm machinery, and fertilizers will lower the cost of agricultural operations and boost rural demand. Farmers will save directly, agribusinesses will earn better margins, and rural entrepreneurs will find consumption in villages and small towns rising. At a time when rural growth is pivotal, these measures bring much-needed relief.
Social security
Exempting GST on individual health and life insurance policies is another game changer. It makes social security affordable and will significantly raise insurance penetration. Coupled with exemptions on essential medicines and medical devices, healthcare affordability and demand will improve. Patients, insurers, hospitals, and the broader ecosystem will all benefit.
For manufacturing and infrastructure, the sharp reduction of GST on cement will lower housing and infrastructure costs, improving project viability and rollout. Reductions on air-conditioners, TVs, and automobiles will stimulate demand in consumer durables and automotive sectors. The correction of inverted duty structures in textiles and fertilizers removes long-standing inefficiencies, eases working capital blockages, and strengthens competitiveness across value chains, benefiting domestic production and exports alike.
The GST rate reduction from 28 per cent to 18 per cent makes trucks more affordable, reducing freight rates, and resulting in cheaper movement of goods.
Labour-intensive industries such as handicrafts, leather, stone products, and textiles — major employers of women and youth — stand to gain from lower rates. These reforms enhance competitiveness, support formalisation, and give MSMEs a stronger growth platform by reducing compliance and cost burdens. The services sector too will benefit. Tourism, wellness, and fitness services move to lower slabs, making hospitality, gyms, and wellness centres more affordable. Domestic tourism will expand, driving new job opportunities across towns and cities.
At the macro level, these reforms inject purchasing power into households by lowering the cost of essentials, consumer goods, healthcare, and insurance. Stronger private consumption — the backbone of India’s GDP — will sustain demand. For businesses, reduced tax incidence and corrected distortions enhance project viability, profitability, and the environment for private investment, directly aligning with the government’s aim of crowding in private capital to sustain growth.
Equally important is the effect on employment. abour-intensive sectors will now generate more jobs, supporting millions of livelihoods and broadening inclusivity. On inflation too, the cuts will ease retail price pressures.
Institutional reforms matter just as much. The operationalisation of the Goods and Services Tax Appellate Tribunal (GSTAT) and process simplification, including movement towards a two-rate structure, will provide predictability and efficient dispute resolution. The GST reforms reflect a humane and inclusive approach. The phased rollout from September 22 ensures fiscal stability while giving citizens and businesses early benefits. Industry must now work with government to ensure seamless implementation and widespread awareness.
GST now enters a simpler, stronger, and a more business- and citizen-friendly phase.
The writer is Past President and Chairman, Economic Affairs Council, CII
Published on September 12, 2025
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