GST 2.0 Could Soften Tariff Shock, Economists Say

The proposed GST 2.0 reforms may provide crucial relief for India amid rising US tariffs. According to a Moneycontrol poll of 15 economists, nearly 67% believe GST cuts will offset at least part of the blow from higher duties imposed by Washington.

Economists Expect Growth Push

Experts highlighted that a reduction in GST rates, coupled with the income tax cuts announced in the Union Budget, could stimulate demand.
Economists at QuantEco Research noted, “Combined with the reduction in income tax announced in the Budget, the GST cuts will be a medium-term positive to spur consumption-led growth.”

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Rising US Tariffs Raise Pressure

Earlier this month, the US hiked tariffs on Indian goods to 25%, with plans to raise the levy to 50% from August 27. The penalty, announced by President Donald Trump, was linked to India’s purchase of Russian oil. Such steep tariffs are expected to put pressure on exports and increase costs for Indian businesses.

Market Update & Insights

• GST 2.0 reforms are being viewed as a key countermeasure to external trade shocks.

• Lower tax rates can boost domestic consumption, providing a cushion for industries hit by tariffs.

• Economists believe India’s consumption-driven economy may help absorb some of the external pressure if reforms are implemented swiftly.

If implemented, GST 2.0 could not only support growth but also shield India from global headwinds, giving the economy some much-needed breathing space.

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