Indian Prime Minister Narendra Modi has announced plans to slash goods and services tax (GST) rates on everyday items, a move economists say could deliver up to $17 billion in annual relief and stimulate demand as the country braces for steep U.S. tariffs.
U.S. President Donald Trump has threatened to double import duties on Indian goods to 50 percent, citing New Delhi’s continued oil purchases from Russia. Indian officials have denounced the move as “unfair” but are seeking ways to cushion the blow.
Modi’s proposed reforms would simplify India’s four-tier GST system to just two brackets of five and 18 percent. The changes would lower taxes on items such as cars and air conditioners, which analysts say could boost household savings and consumption.
While the cuts could strain government finances, experts argue they would offset potential tariff shocks and strengthen Modi’s appeal among middle-class voters ahead of key state elections later this year.
The final decision rests with the GST Council, which has historically struggled to reach consensus. Meanwhile, U.S.-India trade talks remain stalled, raising uncertainty over whether a deal can be struck before Washington’s August 27 deadline.
U.S. President Donald Trump has threatened to double import duties on Indian goods to 50 percent, citing New Delhi’s continued oil purchases from Russia. Indian officials have denounced the move as “unfair” but are seeking ways to cushion the blow.
Modi’s proposed reforms would simplify India’s four-tier GST system to just two brackets of five and 18 percent. The changes would lower taxes on items such as cars and air conditioners, which analysts say could boost household savings and consumption.
While the cuts could strain government finances, experts argue they would offset potential tariff shocks and strengthen Modi’s appeal among middle-class voters ahead of key state elections later this year.
The final decision rests with the GST Council, which has historically struggled to reach consensus. Meanwhile, U.S.-India trade talks remain stalled, raising uncertainty over whether a deal can be struck before Washington’s August 27 deadline.
