Sept 4 (Reuters) – India late on Wednesday announced tax cuts on hundreds of consumer items ranging from soaps to small cars to spur domestic demand, and simplified its complicated goods and services tax structure to two rate slabs from four, with some exceptions for luxury and “sin” goods.The benchmark BSE Sensex (.BSESN), opens new tab and Nifty 50 (.NSEI), opens new tab rose 0.8% each in early sessions.
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Here is how the industry has reacted so far:
ANISH SHAH, GROUP CEO & MD, MAHINDRA GROUP
“The next-generation GST reforms… mark a defining moment in India’s journey towards building a simpler, fairer, and more inclusive tax system.At Mahindra, we view these reforms as transformative. They simplify compliance, expand affordability, and energise consumption, while enabling industry to invest with greater confidence.”
SAURABH AGARWAL, PARTNER & AUTOMOTIVE TAX LEADER, EY INDIA
“The rationalization of GST rates on automotive vehicles and parts is a truly welcome and significant development. By making vehicles more affordable across all segments, this move will not only boost consumer spending but also simplify complex classification disputes that have long burdened the industry.”
SAMIR SHAH, EXECUTIVE DIRECTOR & CFO, HDFC ERGO GENERAL INSURANCE COMPANY
“The GST Council decision to exempt individual health insurance from GST is a welcome development. This move aligns perfectly with the broader ambition of the regulator of ‘Insurance for All by 2047,’ providing a tangible step forward in that direction.While it is anticipated that there will be lowering of the premiums due to lowering of the taxes, we are yet to understand the extent of this reduction as this will also depend upon availability of the input tax credit, which will become clearer over the coming days.”NILESH SHAH, MANAGING DIRECTOR, KOTAK MAHINDRA ASSET MANAGEMENT CO”The GST announcement lowers inflation, increases growth, boosts consumer sentiment, doesn’t disturb the path of fiscal consolidation, improves ease of doing business and partially offers adverse effects of tariffs.”
SHAILESH CHANDRA, PRESIDENT SOCIETY OF INDIAN AUTOMOBILE MANUFACTURES
“This timely move is set to bring renewed cheer to consumers and inject fresh momentum into the Indian Automotive sector. Making vehicles more affordable, particularly in the entry-level segment; these announcements will significantly benefitfirst-time buyers and middle-income families, enabling broader access to personal mobility.”
C S VIGNESHWAR, PRESIDENT, FEDERATION OF AUTOMOBILE DEALERS ASSOCIATIONS
“The 56th GST Council meeting marks a watershed moment for India’s automobile retail industry. This is a decisive step that will boost affordability, spur demand, and make India’s mobility ecosystem stronger and more inclusive.One area that may needs earliest clarification is about levy and treatment of cess balances currently lying in dealers’ books, so that there is no ambiguity during transition.”SANJEEV ASTHANA, CEO, PATANJALI FOODS LIMITED.”At Patanjali Foods, we are fully committed to passing on these benefits to our consumers. This initiative will not only enhance FMCG penetration across urban and rural India but also act as a catalyst for broader economic revival by lifting consumption and supporting allied sectors.Our categories such as ghee, soaps, biscuits, noodles, honey, and chyawanprash will benefit from this reduction.”
RADHIKA RAO, SENIOR ECONOMIST AT DBS BANK IN SINGAPORE
Lower GST rates will be positive for growth in the second half of the year and FY27, besides improving operational efficiency and expanding the size of the formal economy.
GARIMA KAPOOR, ECONOMIST, INSTITUTIONAL EQUITIES, ELARA SECURITIES, MUMBAI
“We expect GST related demand boost to add 100 to 120 bps to the GDP growth over next 4-6 quarters, thereby nullifying the negative impact of higher tariffs on exports to US. We remain constructive on the uptick in consumption demand in the economy as multiple policy levers turn favourable for the first time in a decade.”
SHRIPAL SHAH, MD & CEO, KOTAK SECURITIES
“The GST rate cuts come at the right time which is just ahead of the festive season and against the backdrop of US tariff tiffs. Lower taxes on essentials, FMCG products, autos and cement will leave consumers with more money in hand.This should directly boost demand, help traders and businesses see higher volumes, and may even favourably impact next quarter’s earnings. It also carries the potential to ease inflation. The key will be how quickly companies pass on the benefits to customers.”
DEVARSH VAKIL, HEAD OF PRIME RESEARCH AT HDFC SECURITIES
“The GST reforms represent a paradigm shift toward economic rationality, with rate reductions on essentials like dairy, medicines, and food directly benefiting consumers due to their inelastic nature.Combined with RBI rate cuts, FY26 income tax rebates, and moderating inflation, these reforms create multiple stimuli for consumption and economic growth.”
Reporting by Chandini Monnappa, Bharath Rajeswaran and Manvi Pant in Bengaluru; Editing by Mrigank Dhaniwala and Nivedita Bhattacharjee
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