India is preparing to implement the biggest tax reform in eight years as it seeks to stimulate domestic demand amid economic pressures from U.S. tariffs.
Starting Wednesday, federal and state finance ministers will meet for two days to discuss a proposal to cut Goods and Services Tax (GST) on more than 400 items — ranging from hair oil to small cars — according to a Reuters report.
This move comes alongside personal income tax cuts announced in February, making it part of a broader package of reforms aimed at boosting consumption in Asia’s third-largest economy, which posted stronger-than-expected growth of 7.8% in the quarter ending June.
The tax reductions are expected to positively impact sales for fast-moving consumer goods (FMCG) companies such as Hindustan Unilever and Godrej Industries, as well as major consumer electronics makers like Samsung Electronics and Sony. In the auto sector, companies like Maruti and Toyota Motor are likely to be among the biggest beneficiaries.
With this strategy, the Indian government is emphasizing a dual approach: easing the tax burden on consumers while stimulating key industries such as automobiles and electronics. This is expected to support growth and give an extra push to domestic demand, as India strengthens its position as one of the world’s fastest-growing economies.
