Indian economy to grow 6.4-6.7% in FY26 amid geopolitical risks, says CII President, calls for 3-tier GST structure
He further advocated for a three-tier goods and services tax (GST) rate structure, with essential goods attracting 5 per cent, luxury and sin goods at 28%, and the rest of the items in the 12-18% range.
The current GST system is a four-tier tax structure with 5%, 12%, 18% and 28% slabs. Luxury and demerit goods fall under the highest slab of 28%, while packed food and essential items are charged the lowest 5% slab.
Speaking on India's growth, Memani said that factors such as a good monsoon forecast, liquidity boost due to the Reserve Bank of India's (RBI) cash reserve ratio (CRR) cut, and interest rate reduction will help in the economic growth of the country.
He highlighted risks for the Indian economy and said, 'a lot of these relate to external trade risk. I think a lot of them have been factored in, and also there are some upside. So hopefully they should get balanced out... From a CII standpoint, we're looking at 6.4-6.7 per cent growth.'
However, Memani assured that these risks to growth are evenly balanced, and geopolitical uncertainty poses downside risks whereas strong domestic demand is an upside.
According to the RBI forecast, the economy is estimated to grow 6.5% in FY26. In June, the central bank slashed the CRR by 100 basis points, which is expected to boost liquidity by bringing ₹ 2.5 lakh crore to the banking system. Meanwhile, the benchmark interest rate was cut 50 basis points to 5.5 per cent.
Memani emphasised that GST requires rate rationalisation.
'Under GST 2.0, we have called for rate rationalisation, especially on products that are consumed by lower-income segments. Several products taxed at 28 per cent, including cement, should also be reduced... we believe this will boost economic activity,' he said.
Memani also urged simplifying the GST framework and emphasised the importance of building a national consensus on goods such as petroleum, electricity, real estate, and potable alcohol in GST.
He further mentioned that India needs to capitalise on the current opportunities, 'it will need to undertake more economic reforms, win the AI race and possible impact on jobs, grow high-end and employment intensive manufacturing and continuing focus on Ease of Doing Business.'
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