GST 2.0: A long-awaited reset, but more fixes are needed

GST 2.0 has addressed many of the system’s early flaws, but the task is not complete. Non-alcoholic beverages are revised to be taxed in the same bracket as “sin goods,” automobiles, apparel and electronics are still placed under more than one slab. These structures influence the prices of everyday items and create added challenges for shopkeepers, small manufacturers, and consumers. GST 2.0 is a meaningful reset, but the next step must be greater simplification to ensure the tax system is fair, predictable, and supportive of long-term growth.

GST reform is part of a wider plan to strengthen India from within. Alongside GST, repo-rate cuts and income-tax tweaks aim to boost domestic demand, make borrowing cheaper, and leave more money in people’s hands. But policy must go further. Freebies drain state finances and buy only short-term popularity. Those funds would be better spent on infrastructure, artificial intelligence, logistics, and skill-building investments that create permanent capacity and opportunity. At the same time, efficient Direct Benefit Transfers (DBT), low-cost credit for small businesses, and further tax simplification would empower citizens without burdening the system. In short, GST 2.0 is just the beginning…the next wave of reforms will decide how strongly India grows from within.

Global trade headwinds are adding to the challenge. President Donald Trump’s “America First” agenda uses tariffs to shield US industry, and some of India’s exports are caught in the dragnet. Faced with the choice of bowing to pressure or protecting its own interests, India chose the latter. The risks are real. An SBI report warns of losses of about Rs 1.03 lakh crore a year if cheap imports flood the dairy market sector that contributes 2.5–3 percent of national gross value added (GVA) and sustains millions of rural households. Prime Minister Modi has made it clear that India will not compromise on farmers, industries, or its strategic right to buy oil from partners of its choice. The stance is not just political-it is about protecting livelihoods and building self-reliance.

Yes, there will be pain. US tariffs currently cover roughly $65 billion of Indian exports, and the trade deficit may widen in the near term. But India’s total merchandise exports stood at $441 billion in FY24. The hit is serious, but not fatal.