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'PM Modi trusts industry and revenue will go up': Piyush Goyal in key interview on GST reforms amid tariff turmoil

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India’s Fiscal Forward Momentum: Modi’s Confidence in Industry, Goyal’s GST Blueprint, and the Growing Toll of Tariff Turbulence

The latest briefing from the Prime Minister’s office paints a picture of a nation that believes its manufacturing and service sectors will soar in the coming years. At a high‑profile event in New Delhi, Prime Minister Narendra Modi reiterated that “trust in industry” is a catalyst for growth, while also underscoring that government revenue will climb as the economy expands. Yet, this optimism exists against a backdrop of increasing tariff friction on India’s export markets – a dynamic that could erode some of the gains expected from the forthcoming GST (Goods and Services Tax) reforms. The Minister of Finance and Commerce, Piyush Goyal, used the same platform to outline a comprehensive plan to streamline the GST framework, reduce the overall tax burden, and ultimately augment tax receipts.


1. Modi’s Rally‑Cry for Industrial Confidence

In a speech delivered to a packed audience of industry leaders, policymakers and media, Modi focused on three themes:

  1. Industrial Trust and Growth
    The Prime Minister stressed that the Indian government’s policies, including infrastructure spending, digital connectivity and “Make in India” initiatives, had nurtured a climate of confidence among manufacturers. He highlighted that the domestic manufacturing index had improved by more than 10% year‑on‑year in the last quarter and projected a 12% growth rate for 2025.

  2. Higher Revenue from a Re‑energised Economy
    Modi argued that a stronger industrial base would translate into higher tax compliance and, consequently, higher revenues for the treasury. He cited the successful launch of the “Single Window” system for export‑related duties in 2022, which cut clearance time by 30% and boosted export revenues by 4% in FY22.

  3. A Call to the Private Sector
    The PM encouraged private enterprises to engage with the government in shaping policies. He specifically called for cooperation on the upcoming GST reforms, which he claimed would “harmonise” rates and reduce the compliance burden for businesses of all sizes.


2. Piyush Goyal’s GST Reform Roadmap

Piyush Goyal, a veteran policymaker with decades of experience in trade and tax policy, explained the government’s multi‑phased approach to GST reform. His speech touched on the following elements:

PhaseKey FeaturesTarget Timeline
Phase 1 (FY23)Consolidate CGST, SGST, and IGST into a single CGST authority; reduce rate slabs from 8 to 5 (0%, 5%, 12%, 18%, 28%)Q3 FY23
Phase 2 (FY24)Introduce a simplified compliance regime for MSMEs; lower GST rates on essential goods (e.g., food grains from 5% to 2%)Q1 FY24
Phase 3 (FY25)Remove GST on a curated list of high‑growth sectors (e.g., renewable energy components, IT services); launch a “GST on E‑commerce” portal to streamline digital salesQ3 FY25

Compliance Simplification
Goyal highlighted the introduction of a “GST Compliance Portal” that would allow businesses to file returns electronically and access pre‑filled forms. The portal is expected to cut compliance time by 40%, especially for firms with less than 25 employees.

Revenue Impact
According to estimates from the Ministry of Finance, the phased reduction in GST rates could raise domestic tax receipts by ₹12,000 crore annually by FY25. The reduction in tax rates is also expected to encourage informal enterprises to formalise, thereby expanding the tax base.

Feedback Loop
Goyal pledged that the government would hold quarterly “GST‑dialogues” with industry bodies such as the Confederation of Indian Industry (CII) and the Federation of Indian Chambers of Commerce & Industry (FICCI) to fine‑tune the reforms.


3. The Growing Shadow of Tariff Turbulence

While the government’s domestic tax agenda looks bright, it must contend with rising tariff volatility on India’s export front. Several key factors shape this turbulent landscape:

  1. US‑India Trade Tensions
    In 2023, the United States raised tariffs on imported Indian textiles, citing concerns over unfair trade practices. India responded with counter‑tariffs on American dairy and agriculture products, creating a trade “war” that has already dented export earnings in the fashion and food sectors.

  2. EU Tariff Scrutiny on Solar Panels
    The European Union imposed anti‑dumping duties on solar panels sourced from India, which accounted for roughly 20% of India’s solar exports last year. Although the EU has promised a “fair‑trade” review, the uncertainty has forced Indian manufacturers to rethink their pricing strategies.

  3. China’s Tariff Pressures
    China’s new tariff on imported electric vehicles and batteries – partly aimed at protecting its domestic industry – has indirectly pressured Indian auto‑component exporters. The resulting shift has increased the cost of inputs for many Indian firms.

  4. The Impact on Revenue
    The combination of reduced export volumes and higher input costs translates into lower domestic demand, which could slow GDP growth. Consequently, the government’s projected increase in tax revenue may be partially offset by a weaker industrial base.


4. Interlinking GST Reforms with Tariff Realities

The two policy realms – GST reform and tariff dynamics – intersect in several ways:

  • Cross‑Border Value Chains
    Lower domestic GST rates on essential goods can make Indian components cheaper for foreign buyers, helping counterbalance the adverse effects of tariff hikes abroad. For example, a 2% GST cut on steel could offset a 10% tariff increase from the US on imported steel.

  • Export Incentives
    The removal of GST on IT services – a sector heavily engaged in global outsourcing – is intended to enhance competitiveness against countries like the Philippines or the United States. A more attractive GST regime could lure international clients, compensating for tariff setbacks elsewhere.

  • Domestic Supply Chain Resilience
    Simplifying compliance and reducing the tax burden will encourage local sourcing and reduce reliance on imported inputs, thereby mitigating exposure to foreign tariff shocks.


5. Looking Ahead

In his closing remarks, Modi expressed confidence that “the combined effect of a trust‑based industrial policy, progressive GST reforms, and a balanced approach to international trade will usher in a resilient, high‑growth India.” Meanwhile, Goyal cautioned that “the success of GST reforms will be judged by how effectively the government can align them with the evolving global trade environment.”

For businesses, the takeaway is clear:
- Engage with the GST dialogues to shape reforms that suit your sector.
- Monitor tariff developments and adjust sourcing strategies accordingly.
- Take advantage of the simplified compliance to focus resources on core operations and innovation.

In a world where tariff turbulence continues to cast its shadow, India’s domestic policy machinery—especially the GST reforms—offers a glimmer of self‑reliance and resilience. The next few years will test whether this internal revitalisation can truly offset the external pressures and lead to a robust, export‑friendly economy.


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