GST rationalisation: Piyush Goyal hails move as game-changing; analysts say move may cushion India from US tariff shock

Union commerce and industry minister Piyush Goyal on Thursday described the sweeping Goods and Services Tax (GST) rationalisation as “game-changing” and urged the industry to ensure that consumers receive the full benefit of rate cuts.As per news agency PTI, speaking at the India MedTech Expo 2025, Goyal said, “Yesterday’s reform in indirect taxes in GST, coming on the back of several initiatives over the last 11 years, is transformational in nature, significantly impacting the pharma sector, significantly impacting so many sectors, right from the farmer until our MSMEs.” He added, “Every stakeholder in the country, every consumer, stands to benefit.” The minister emphasised that the reduction in GST rates would lower costs across industries and play a vital role in India’s journey to becoming a developed nation by 2047. He urged businesses to “pass on all these benefits of GST to the consumers.”According to him, the pharma and nutraceutical industries are among the major sectors that will gain.Industry leaders and experts have also welcomed the reforms. National Stock Exchange (NSE) MD and CEO Ashishkumar Chauhan described the measures as “a landmark step forward,” saying they would improve India’s growth rate while reducing the tax burden on businesses and citizens. “The capital markets welcome these steps and stand ready to support the next phase of India’s development journey,” he said, as quoted by news agency ANI.Nilesh Shah, MD of Kotak Mahindra Asset Management Company, called the rationalisation “a step in the right direction”, stressing that it lowers inflation, boosts consumer sentiment, and offsets some of the negative impact of US tariffs. Aditi Nayar, chief economist at ICRA Ltd., said the GST reforms could cushion part of the adverse effects of the new US tariffs.She noted that any revenue loss faced by the Centre and the states would ultimately have to be offset through alternative revenue sources or tighter spending. According to government estimates, the GST rate cuts will cost the exchequer around Rs 48,000 crore in net terms.“Since the GST rationalisation has been rolled out earlier than expected, coinciding with the consumption-driven festive season, the moderate revenue loss anticipated in the second half of this fiscal will still require either fresh revenue mobilisation or expenditure-saving steps,” Nayar explained, as cited by ANI.The overhaul comes days after Prime Minister Narendra Modi, in his Independence Day speech, described the reform as a “Diwali gift” for citizens. The GST Council has merged the 12% and 28% slabs into two main rates of 5% and 18%, while introducing a 40% bracket for sin and luxury goods. Everyday items, including essential household products, will now see lower tax rates. Goyal, who has also been leading India’s trade negotiations with the US amid heightened tariff tensions, said the reforms reaffirm the government’s commitment to ease of living and business.