Why GST is must for Make in India?


With GST highly unlikely to see the light of the day on April 1, 2016, the Make in India dream appears to be under threat at this stage


Roadblock to the introduction of GST


The Constitutional Amendment (122nd) Bill, 2014 for amendment of the Constitution of India to introduce GST was introduced in the Lok Sabha on December 19, 2014. As the current Government had ample majority in the Lok Sabha, the bill was passed by the lower house on May 6, 2015. However, due to lack of majority in the Rajya Sabha, the GST has hit a roadblock at the Upper House of the Parliament.


GST still has a long way to go before it is finally enacted. After the Bill is passed in both the Houses of Parliament by two thirds majority, the Bill will be sent to the State Legislatures for ratification. The ratification by at least 50 per cent of the State Legislature will be required before the proposed Constitution amendments are brought into effect.


Thereafter, the Parliament would be required to legislate laws pertaining to CGST and IGST. The State Legislatures would legislate laws relating to SGST.


The current conundrum


Going by the current conundrum, whereby the Bill has been blocked by the opposition owing to political reasons, it appears to be highly unlikely that the GST would be reality even on April 1, 2016, as was promised by the Finance Minister during his Budget Speech.


In a recent development, the government was contemplating reconvening the Parliament’s monsoon session, which was adjourned sine die on August 17, 2015 owing to continued disruption by the opposition. However, the government failed to arrive at any consensus with the opposition and hence the house could not be reconvened. As per media reports, the FM appears to have admitted that the GST would not see the light of the day on April 1, 2016.


The above development is clearly a major setback and has dented the confidence of both domestic manufacturing companies and foreign investors & foreign manufacturing companies, who were looking forward to GST which could have revived their interest in the Indian manufacturing sector. The Make in India dream to convert India into a manufacturing hub appears to be threatened at this stage.


As per certain recent reports, a foreign company proposing to set up manufacturing units India has been advised not to invest on account of uncertainty on the introduction of GST.


GST: A national agenda


The repeated blocking of the passage of the GST bill in the Parliament by the opposition, in the recently concluded monsoon session was unequivocally condemned by the industry. Though, this had no impact and no business was allowed to be conducted during the entire monsoon session, the need of the hour is for the industry to speak in one voice and continue its push for rolling out this reformative legislation.


GST is an apolitical issue and is much needed indirect tax reform to usher in a manufacturing revolution in India. GST is not only investor or business friendly but also consumer friendly. Also Make in India should not be viewed as a political agenda but a national agenda, which would put India as a strong global player in the global map as a manufacturing hub and simultaneously create job opportunities to the youth of this country.


GST is the need of the hour and any hindrance to its enactment, whether political or otherwise, is clearly unwarranted and not in national interest.


Leave a Reply

Your email address will not be published. Required fields are marked *