An Assocham-APAS study has revealed that with the rollout of the Goods and Services Tax (GST), the industry alone is expected to contribute USD 280 billion to India's Gross Domestic Product (GDP) in the next eight to nine years.
According to the chamber, the GST will enable positive structural changes in the ease of doing business, which in turn would propel the growth.
Describing the GST, in the short-term, as "a mini budget short of projection of estimated revenue," the paper noted that most businesses would be able to get significantly more credits under the GST, thus proving to be beneficial 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. We believe that the 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 unorganised to organised players," the paper read.
Assocham Secretary General D S Rawat highlighted that one of the most visible benefits accruing immediately from the GST is the removal of the octroi check posts at the inter-state borders. With most of the 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, he said.
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, the GST will make 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," the paper noted.
Among the other benefits to the industry and particularly the SMEs, they would find it easier to start the business and improvement in the market for the MSMEs. Besides, the logistics overheads would be lower as the country-wide market becomes unified.
Just as the GST would help the MSMEs, the newly started Insolvency and Bankruptcy Code (IBC) should put the non-productive assets into productive use, though the institutional infrastructure and capacity building to implement the IBC would be the key.
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