Reactions to India's reduction of consumption tax on hundreds items

India announced on Wednesday that it would reduce taxes on hundreds of items, from soaps to cars, to boost domestic demand. It also simplified its complex goods and services tax structure, reducing the number of rate slabs to two from four. There were some exceptions, however, for luxury goods and "sin goods".

On Thursday, the benchmark BSE Sensex index and Nifty 50 both rose by as much as 1.1%. By 11:55 IST they had pared their gains and were each up around 0.5%.

Here's how the industry has responded:

ANISH SHAH, GROUP COOPERATIVE & MD MAHINDRA GROUP

"The next-generation GST Reforms... mark an important moment in India's quest to build a simpler and fairer tax system that is inclusive.

Mahindra views these reforms in a transformative way. They simplify compliance, increase affordability, and energise the consumption while allowing industry to invest more confidently.

SAURABH AGAWAL, PARTNER, AUTOMOTIVE TASKS LEADER AT EY INDIA

The rationalization of GST on automobile vehicles and parts has been a welcome and significant change. This move, which makes vehicles more affordable in all segments will boost consumer spending and simplify the complex classification disputes that have plagued the industry for years.

SAMIR SHAH, EXECUTIVE DIRECTOR & CFO HDFC ERGO GENERAL INSURANCE COMPANY

"The GST Council's decision to exempt health insurance for individuals from GST is an important development. This decision is in line with the regulator's broader goal of "Insurance for All By 2047", and represents a significant step forward.

NILESH SHAH, MANAGING DIRECTOR, KOTAK MAHINDRA ASSET MANAGEMENT CO

The GST announcement reduces inflation, boosts growth, boosts the consumer's sentiment, does not disturb fiscal consolidation, and improves the ease of doing business. It also partially offers negative effects of tariffs.

SHAILESH CHANDRA PRESIDENT SOCIETY INDIAN AUTOMOBILE MANUFACTURERS

This timely move will bring new energy to the Indian automobile sector and will be a boon to first-time purchasers and families with middle incomes. These announcements are expected to benefit both groups, as they enable a broader access to mobility.

C S VIGNESHWAR PRESIDENT, FEDERATION OF AUTOMOBILE DELIVERERS ASSOCIATIONS

This is a significant step which will increase affordability, stimulate demand and strengthen India's mobility eco-system.

The levy of cess and the treatment of cess balances in dealer's books is an area that needs clarification to avoid ambiguity.

SANJEEV ASTHANA, CEO, PATANJALI FOODS LIMITED

Patanjali Foods is committed to passing these savings on to its customers. This initiative will enhance FMCG penetration in urban and rural India, but will also act as catalyst for a broader economic recovery... Categories such as ghee and soaps will benefit.

RADHIKA RAO SENIOR ECONOMIST DBS BANK

Lower GST rates are expected to boost growth in the second and third quarters of this year, as well as the FY27 period. They will also improve operational efficiency and expand the formal economy.

SHRIPAL SHAH is the MD & CEO of KOTAK SECURITIES

The GST rate reductions... will directly boost demand and help businesses and traders see increased volumes. They may even have a positive impact on next quarter's profits. It will be important to see how quickly businesses pass the savings on to their customers.

DEVARSH VAKIL HEAD OF PREMIUM RESEARCH HDFC SECURITIES

The GST reforms are a paradigm change towards economic rationality. These reforms, when combined with RBI rate reductions, income tax rebates for FY26 and a moderated inflation, create multiple stimuli to stimulate consumption and economic growth.

SUDARSHAN VENU, CHAIRMAN TVS MOTOR COMPANY

It's a good move, as it will make two-wheelers more accessible to those who want to upgrade.

NEERAJ AKHOURY - PRESIDENT OF THE CEMENT MANUFACTURERS ASSOCIATION & MANAGING DIRECTOR AT SHREE CEMENT

The GST rate of 18% will correct a longstanding anomaly and align cement with other building materials. It will also enhance global competitiveness.

NITIN RAO is the CEO of INCRED WEALTH

"I'm ) confident this will work out. However, there is a slight concern that recent measures such as the tax reductions and the budgetary measures haven't created the necessary consumption boosts."

RAHUL SINGH, CIO-EQUITIES, TATA ASSET MANAGEMENT

"The rationalisation of the GST rate, after the income tax reductions and lower interest rates is a serious attempt to boost consumption, and therefore the overall economic growth forecast.

Retail banks and NBFCs will benefit from the growth in the second-order order.

RAJNEESH KUMAR, CHIEF CORPORATE AFFAIRS OFFICER, FLIPKART GROUP

These reforms will strengthen India's economic engine by lowering input costs, simplifying compliance requirements for MSMEs, and enabling small sellers/artisans/weavers, smallholder farmers and smallholders to join ecommerce seamlessly across states.

SHEETAL ARORA is the CEO of MANKIND PHARMA

The government has shown that affordability and innovation are compatible by reducing the GST on essential medicines, diagnostics and rare-disease therapies.

Amit Paithankar, CEO of WAAREE Energy

The reduction in project costs will reduce project costs and speed up the addition of capacity needed to meet India’s clean energy target.

ARNAB BANERJEE is the MD & CEO of CEAT

The Council's response to a long-standing industry demand has not only given a boost the automotive ecosystem, but has also opened the door for more formalisation, compliance and sustainable growth.

SHENU AGARWAL, MD & CEO, ASHOK LEYLAND

The relief provided to the commercial vehicle industry in particular is very welcome. It will increase freight traffic and lower the price of trucks and buses.

AASIF MALBARI CHIEF FINANCIAL OFFICER GODREJ PRODUCTS LTD

This is a powerful driver for volume growth and a positive trigger of demand. This will contribute to the overall economic momentum. "We are committed to passing on the benefits of lower GST rates to consumers."

VENKATRAM MAMILLAPALLE MANAGING DIRECTOR RENAULT INDIA

We believe that the reform will boost rural and urban demand, and manufacturing in India.

UNSOO KIM MANAGING DIRECTOR, HYUNDAI MOTO INDIA

The GST overhaul will benefit the automotive industry directly. The reforms announced are in line with the government’s commitment to Viksit Bharat, and the Make in India program. They encourage domestic manufacturing while boosting demand in both urban and rural areas.

(source: Reuters)