India Inc Hopes Demand, Capex Will Rise

India's corporate leaders are betting on revival in capital spending and consumer demand after Prime Minister Narendra Modi on Friday vowed to deliver sweeping goods and services tax (GST) reforms by Diwali.

- BS REPORTERS

The overhaul, described by Modi as a "Diwali gift" during his Independence Day address, aims to lower tax rates, simplify compliance, and modernize the GST system to make it more growth-friendly.

Corporate leaders expect the planned revamp to cut levies on daily-use goods, rationalize rates to address inverted duty structures, and move towards a two-slab framework—one standard rate and a lower merit rate for essentials, with special rates for food products.

The reforms will focus on easing the tax burden on small industries and micro, small and medium enterprises (MSMEs). It will make compliance less cumbersome through technology-driven measures such as pre-filled returns, faster refund processing, and fully digital registration.

Industry executives say the potential impact on investment decisions could be significant, particularly in manufacturing, logistics, housing, and consumer goods.