Industry is expected to contribute $280 billion to Indias GDP in eight to nine years due to a positive fallout of the Goods and Services Tax (GST) as structural changes in the ease of doing business will propel growth, a study said on Wednesday.
The study was done by ASSOCHAM-Ashvin Parekh Advisory Services. The Mumbai-headquartered body is a global management consulting firm with footprint in India and the UK.
Describing the GST, in the short-term, as a “mini budget short of projection of estimated revenue”, the paper said most businesses would be able to get significantly more credits under the new indirect tax regime, leading to a benefit for most of them.
“It will bring a systematic approach and enhance transparency which will aid growth of business and would help the industry to concentrate on its core business,” the paper said.
“We believe that GST is a structural reform and is expected to accelerate the pace of GDP growth in India, despite implementation challenges in the near term. It would usher in lower taxes, seamless input tax credit, logistics savings and market share swings from unorganized to organised players,” the paper added.
One of the most visible benefits accruing immediately from GST is removal of the octroi at the checkposts at the inter-state borders, the most irritating and efficiency killing phenomenon that should have gone long ago, said ASSOCHAM Secretary General D.S. Rawat.
“In any case, with most states removing the major trade obstacle immediately after the rollout of the GST, the ease of doing business would go up significantly and the operational efficiency would improve singularly from the removal of the border checkposts,” he added.
The paper said that notwithstanding the teething troubles, the GST would make even the micro, small and medium enterprises (MSMEs) more efficient and confident, integrating them well into the mainstream of the economy.
“Eventually, GST will turn these MSMEs more competitive with a level playing field between large enterprises and them. Furthermore, the Indian MSMEs would be able to compete with foreign competition coming from cheap cost centres such as China, the Philippines and Bangladesh”.