 "India Inc wants faster, timely roll-out of GST")
With the revised Bill for a national goods and services tax (GST) set to be introduced in the Rajya Sabha, company chief executives say the "giant" reform step will go a long way in reviving the manufacturing sector, suffering from low capacity and lack of demand.
"A giant step in reforms awaits India, the biggest since liberalisation and the boldest, considering its state-level challenges. GST is a gateway to economic development through superior tax administration, lower interstate trade barriers and overall ease of doing business. The nation is poised to reap the dividends of growth that would arise out of this landmark legislation. The Modi government's most progressive reform initiative by far," said Harsh Goenka, chairman of RPG Enterprises.
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They would like the rollout by April 1 next year (start of the new financial year).
"This is likely to benefit sectors like FMCG (fast-moving consumer goods), automobiles, cement, light electricals, multiplexes, retail and logistics. However, commercial vehicles, print media, cigarette and jewellery companies would be adversely impacted," said a Motilal Oswal Financial Services analyst.
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The logistics sector will also benefit from removal of inefficiencies in interstate taxation and at checkposts. The services sector might see a negative impact from a higher tax under GST, compared to 15 per cent at present, says global bank HSBC.
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The real value of GST would be seen in tax governance, where a system plagued by a plethora of discretionary and ad-hoc taxes would move toward a rule-based, transparent and stable regime. This would ensure 'neutrality' across players, products or services, locations or business cycles, say analysts.
Manufacturing companies have faced four years of slowdown. A report by CMIE says private companies announced 2,856 new projects worth Rs 11.33 lakh crore, between financial years 2014 and 2016 but of this, only a third is under implementation. This was mainly due to low-capacity utilisation, low demand and high interest rates.