GST is an inspiration for ‘Make in India’
‘Make in India’ initiative was launched by the government on 25th September 2014 to encourage India as a global manufacturing hub. The one and only impulse of such well-thought initiative is to attract the foreign direct investment (FDI) to one of the fastest growing economies of the world. This initiative made India as one of the top destinations to welcome FDI after the United States of America and the People’s Republic of China with US$63 Billion in the year 2015.
The Goods and Services Tax (GST) gave a major boost to the ongoing ‘Make in India’ initiative. GST gave the Indian goods and services a competitive rate in the international markets, adding benefit points to the Make in India initiative.
GST boosts industrial manufacturing sector
The industrial manufacturing sector in India is a far-flung division that embraces machine manufacturing, metal and electrical products, construction, cement, plastic, rubber and automation technology products. This industry has faced a challenging time recently before GST’s launch due to high rate of interest and domestic slow down. Therefore, the companies have focused more on export sales to boost their businesses.
GST reduces production cost
This uniform tax structure reduces many indirect taxes and as a result, the production cost is now lower than the previous tax regime. Input tax credit is now unrestricted and experts believe that GST will increase the profit in the manufacturing sector by 10% in a long run.
Effortless supply of goods
The transaction of goods supplied through various state border is faster now as GST has simplified the indirect tax system. As a destination based tax, GST eliminates all the commercial check posts in the state’s border and this gives a big relief to the transportation system. Thus, this new GST model is unifying the Indian market by reducing the logistic costs and transit hours.
Simplifies supply chain
Manufacturers can have their own personalized supply chain with GST. With an enhanced inventory management and cost-effective logistic system, this new tax structure simplifies the supply chains in India.
Opens up market
GST opens up market beyond the comfort territories by expanding the product and service sector. In addition to this, it will inspire the states to go for more innovative production by reducing the manufacturing cost.
GST spurs job creation
GST spurs job creation in the fields of data analysis, accounting and taxation with an immediate effect. Experts also believe that the growth rate of the formal job sectors will increase by 10-13% annually. The other immediate jobs creating sectors are consumer goods/FMCG, auto industries, logistics, media and cement.
The end game
The GST as a new tax structure is changing the former and complex indirect tax regime into a simple and unified one. It is not only changing the supply of goods and service scenario of India but also affecting the ‘industrial manufacturing’ sector with a lower production cost. The ‘Make in India’ as a movement along with ‘Skill India’ has created a decisive scenario for the startups in the country after years. While GST as a plain indirect tax system is an icing on the cake of the ‘Make in India’ initiative by taking the industrial manufacturing sector to the next level.