Gains For Big Guns

GST has divided industry down the middle—the big guns are smiling, but small traders are jittery

- Sumant Banerji

As the clock ticked to the midnight of June 30 in the run-up to the introduction of the Goods and Services Tax, arguably the biggest economic reform in India in at least 26 years, different parts of the $2 trillion economy reacted differently—some with excitement, others with trepidation. At the Bengaluru head office of US cola major Coca Cola’s bottling arm, Hindustan Coca Cola Beverage (HCCB), the atmosphere was festive. An hour past mid-day on July 1, HCCB raised its first invoice under the new tax regime for a distributor in Karnataka. The firm, like most other big companies in India, had been preparing itself and its business associates for months. A designated team of 100 trainers held more than 70 sessions with its 4,000-odd distributors.

GST subsumes nearly 17 taxes and 23 cesses of different kinds levied on goods and services across India by states and union territories. Its benefits far outweigh the transition pangs and cost of efforts that large companies like HCCB have put to make the value chain compliant with the new structure. "You can give any challenge and India can find a way to make it work,” says a beaming Christina Ruggiero, CEO, HCCB, who is only three weeks into her first assignment in India.

At the other end, 53-year-old Darshan Singh, who runs a small textiles and fabric design house in Ludhiana, is staring at a bleak future. Singh buys fabric from mills, processes it, and sells the re-designed fabric to bigger firms. In order to claim input credit, those companies now want Singh to provide them with a digitised GST compliant invoice. Completely at sea with the new structure, he has already seen orders dwindle as some clients have moved away to those already registered with the GST network.