GST boost economic growth by nearly 2 percent

Buoyed by the passage of the GST Bill in Rajya Sabha, industry leaders said the roll out of the indirect tax reform will lure more foreign investors to India, improve the country's manufacturing competitiveness and boost economic growth by nearly 2 percent.

"GST will be the most pivotal reform since 1991 which will make India an attractive destination for foreign investments. Manufacturing will get more competitive due to the emergence of a national market as against the present fragmented one.

"The low tax to GDP ratio of the country will go up, helping the government to adhere to fiscal discipline and keep the inflation in check. It will improve productivity and transparency," the Chairman of Hinduja Group of Companies India, Ashok P Hinduja, said.

However, he sought clarity on the continuance of existing exemptions especially those linked to investment made both at the Centre and state levels.

The Rajya Sabha yesterday gave its approval to the long- pending GST Bill as government forged a consensus with Opposition parties for passage of the reform legislation.

"GST is India's most significant tax reform in decades.

When implemented, it is expected to usher in a harmonised national market of goods and services and shall lead to a simplified, assessee-friendly tax administration system.

"Once implemented, it will subsume all of the country's central and state level duties and taxes thus making it a national market and contribute significantly to the growth of the economy," CII President Naushad Forbes said.

CII said it anticipates that GST, if implemented from April 1, 2017, would reduce transaction costs and boost GDP by 1.5 to 2 percent.

US-India Business Council (USIBC) termed the indirect tax reform as a "game-changer" that will boost economic growth by streamlining domestic supply chains and remove the compliance burden of contradictory state tax regimes. These factors, it said, are bound to increase India's global competitiveness as an investment destination.

"There are deep benefits for both domestic and global industries in this clear, predictable, and unifying approach," USIBC President Mukesh Aghi said.

He said the GST is also likely to make goods cheaper for consumers, increase competitiveness of Indian exports in international markets and boost country's GDP growth by 2 percent, adding that the far-reaching reform places India at the cross-roads of an incredible economic opportunity.

PHD Chamber of Commerce President Mahesh Gupta said GST will enhance India's growth trajectory to 10 percent in the next few years by 2019-20.

YES Bank MD and CEO Rana Kapoor said the implementation of GST will unify India's tax architecture, make manufacturing efficient and boost ease of doing business, thus ushering a virtuous growth cycle in the country up to 2050.

However, engineering exporters' body EEPC India Chairman T S Bhasin said while the measure would help the country's manufacturing, exporters are likely to face implementation difficulties if the Model GST law is adopted.