PTI New Delhi

The GST rate rationalisation is set to kick off a cycle of growth for India's economy, driven by a major consumption boost, and provide much-needed cushion against the headwinds emanating from "lopsided" tariff regimes being pushed by the US, industry leaders said on Thursday.

The GST Council on Wednesday cleared sweeping changes to the indirect tax regime, approving an overhaul of rates by limiting slabs to 5 per cent and 18 per cent effective from September 22, the first day of Navaratri. Ashok P Hinduja, Chairman, Hinduja Group of Companies (India), said the GST rate cuts announced across the board augur well for the economy as they will support India's macroeconomic stability by spurring demand at the grassroots level.

"This move was a much-needed consumption booster to cushion the global economic headwinds resulting from the lopsided tariff regimes being pushed by the US. It will have a cascading positive effect on several adjacent sectors, both upstream and downstream," he stated. Mahindra Group Chairman Anand Mahindra took to social media platform X and batted for more such reforms to spur consumption and drive invest.

"We have now joined the battle. More and faster reforms are the surest way to unleash consumption and investment. Those, in turn, will expand the economy and amplify India's voice in the world. But let's remember the famous exhortation of Swami Vivekananda: "Arise, awake, and stop not till the goal is reached." So, more reforms, please.," Mahindra said in the post. FICCI President Harsha Vardhan Agarwal said the simplification of the tax structure will offer multiple benefits.

"It will reduce classification disputes, improve compliance and address anomalies on account of inverted duty structure. While there are revenue implications of the announced measures as outlined by the government, the important point to note is the improvement in economic sentiments the reduction in rates will lead to and which in turn will boost consumption demand. This is a major positive for the economy both in terms of lifting growth and containing inflation," he stated.

CII Economic Affairs Council Chairman R Dinesh asserted that the reduction of GST rates on essential goods such as dairy products, medicines and everyday household items, along with reforms in processes and institutional strengthening, will directly benefit consumers, the aspirational middle class, and industry alike.