GST 2.0 reduces costs for households and makes essentials more affordable
Industry gains from simplified compliance, lower input costs and faster refunds
Reform bridges India’s growth ambitions with everyday citizen welfare
I have watched India’s tax journey transform over the decades—from the maze of state and central levies to the bold stroke of GST in 2017. Today we stand at another inflection point with GST 2.0. This is not just a change in policy; it is a reform that touches the everyday lives of millions.
When a mother buys a packet of biscuits, a student eats a bowl of noodles, a worker pays his bus fare or a farmer installs a solar panel, GST 2.0 is quietly at work. It is a reminder that taxation is not an abstract concept confined to boardrooms or government circulars.
It directly determines what a family saves at the kirana, how affordable travel is and how competitive Indian industry becomes. GST 2.0 is therefore both economic and social.
For businesses it simplifies compliance, cuts costs and improves competitiveness. For citizens it reduces the burden of essentials, encourages consumption and brings relief to household budgets.
In connecting the fortunes of industry and the comfort of households this reform is a bridge linking India’s growth story with its people’s aspirations.
The People’s Impact
The most visible and immediate impact of GST 2.0 will be felt by ordinary citizens. By moving everyday essentials such as biscuits, cereals and packaged foods into the 5% slab, the government has given direct relief to households. Services like gyms, salons and hotel stays are moving to the 5% slab. Families will experience the change tangibly at their neighbourhood kirana stores and supermarkets within weeks.
What may seem like small adjustments in taxation will free up disposable income, easing the pressure of rising living costs. For millions of consumers, GST 2.0 will make essentials a little more affordable and a monthly grocery run a little less burdensome.
Rationalisation of the tax rate on cement will provide a boost to infrastructure and real estate and directly impact the cost of housing, roads and large-scale infrastructure projects. Equally important is the lower GST rate on tractors which will reduce the burden on farmers. The tax relief will cut acquisition costs, making mechanisation more affordable and accessible, particularly for small and marginal farmers.
The current effect will be felt in allied industries such as farm equipment, fuel and services, reinforcing rural demand and empowering India’s backbone—the farming community.
The Industry Impact
Industry stands to gain significantly from this reform. A revival in FMCG demand is expected with growth projected at 8–10%, much higher than the 5–6% levels seen in recent years. This will naturally translate into higher demand for allied sectors like flexible packaging. The lowering of tax rates on logistics, mediclaim and life insurance, hotels and renewable energy devices also reduces input costs and improves efficiencies across value chains.
One unsung aspect of this GST reform is the correction of the inverted duty structure and the enablement of faster refunds, thereby easing the working capital burden of businesses. Exporters will benefit from increased cost competitiveness, quicker refunds and smoother working capital cycles, enhancing India’s ability to compete in global markets.
For a manufacturer like Ester Industries, engaged in flexible packaging films and specialty polymers, these measures will support growth, improve cash flows and create a stronger platform for innovation and expansion. All industries are expected to see increased formalisation due to the lowering of GST slabs.
Risks and Realities
Globally, sluggish demand and supply chain disruptions, particularly in export-oriented sectors, may blunt the short-term impact of these domestic reforms. It is crucial to note that the full effects of GST 2.0 on economic growth and consumer savings will take time to materialise as the market, government and consumers adapt to the new regime.
A key challenge will be the temporary impact on government revenue. Lowering tax rates on essential goods and services could cause a short-term dip in the government’s tax collections. While this is expected to be offset by higher consumption and improved compliance over the long run, it could strain fiscal targets and public spending in the interim. Managing this revenue gap successfully will be critical to the reform’s overall success.
Innovation Inspires Investment
Ultimately, GST 2.0 must be seen as part of India’s broader growth journey. It simplifies business, empowers citizens and strengthens our global standing. By reducing costs, stimulating demand and fostering innovation, it creates jobs and encourages investment. Most importantly, it ensures reforms are not just felt in corporate boardrooms but in the daily lives of families across the country. As a business leader and as a citizen I welcome GST 2.0 as a reform that truly connects growth with people’s lives—one that makes India more competitive abroad while making everyday living more affordable at home.
