India’s latest tax overhaul, dubbed GST 2.0, is expected to unlock a wave of domestic consumption and provide a cushion against tariff headwinds emerging from the United States, according to industry leaders. The GST Council’s approval of sweeping changes on Wednesday reduces the rate slabs to 5% and 18%, with the new structure taking effect on September 22, coinciding with the start of Navratri.
Ashok P. Hinduja, Chairman of Hinduja Group of Companies, called the move a timely catalyst for spurring demand across sectors. He said the rate rationalization would not only stabilize India’s macroeconomic environment but also help counter the impact of “lopsided” trade policies pushed by the US. Hinduja emphasized that the changes would positively influence multiple industries, from grassroots markets to upstream and downstream supply chains.
Anand Mahindra, Chairman of the Mahindra Group, took to X to welcome the reform and urged policymakers to continue on this path. “More and faster reforms are the surest way to unleash consumption and investment,” he wrote, quoting Swami Vivekananda’s call to persevere until the goal is achieved.
Business bodies echoed this optimism. FICCI President Harsha Vardhan Agarwal noted that the simplified structure would minimize disputes, reduce anomalies from inverted duty systems, and boost consumer confidence. Similarly, CII Economic Affairs Council Chairman R. Dinesh pointed out that reduced GST rates on essentials like medicines and dairy products would benefit both consumers and industry, fueling a cycle of growth.
E-commerce major Flipkart’s Chief Corporate Affairs Officer Rajneesh Kumar said the timing of the reforms, ahead of India’s festive season, would accelerate consumption and broaden market access. Market leaders like NSE’s Ashishkumar Chauhan stressed that GST 2.0 builds upon the historic foundation of India’s unified tax regime.
Experts also weighed in on revenue implications. Aditi Nayar, Chief Economist at ICRA, highlighted that while domestic GST components recorded solid growth, IGST collections on imports showed unusual contraction despite rising merchandise imports. She suggested low inflation might be dampening overall revenue.
Other leaders, including InCred Wealth CEO Nitin Rao and Muthoot Microfin CEO Sadaf Sayeed, emphasized the alignment of fiscal and monetary policies. They predicted that the combination of GST cuts and the RBI’s recent 50-basis-point rate reduction would propel India’s growth trajectory further.
FMCG companies also welcomed the changes. Mars Wrigley India’s Ahmed Abdel Wahab noted that the decision to shift chocolates and other items into the 5% tax bracket comes at the right time, allowing brands to innovate, add value, and support retailers nationwide.
Overall, GST 2.0 is being positioned as a bold step that reduces costs, encourages investment, and places India on a stronger footing to withstand global economic challenges.
