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Mint
17-07-2025
- Business
- Mint
Simplify GST: It's time for a single all-India identification mandate
The goods and services tax (GST), which recently completed eight years in India, was originally envisioned as a 'good and simple tax." However, over time, it has become increasingly complex. While a national GST would have been an ideal value added tax (VAT) system, the imperatives of a federal structure led to a compromise, resulting in a dual GST system comprising Central GST (CGST), State GST (SGST) and Integrated GST (IGST). Under this system, the Centre and state governments have concurrent authority to tax the consumption of goods and services based on the principle of incidence at destination, in contrast with the previous indirect tax regime, which followed an origin-based taxation approach. Also Read: Ajit Ranade: A progressive GST is easier to promise than achieve While the uniformity of SGST laws across states has reduced compliance complexities compared to the VAT regime, challenges remain. Businesses with a pan-India presence still need multiple SGST registrations and must manage compliance separately for each state, including GST payments and return filings. This fragmented approach retains some of the administrative burdens of the VAT era despite the procedural standardization. Compliance burden: The Indian GST framework, often referred to as a 'one nation, one tax' system, has unified tax rates across states and Union territories (UTs), eliminating other taxes on goods and services under its scope. While this standardization simplifies the tax structure, businesses that operate across multiple states or UTs, as mentioned above, are required to obtain separate GST Identification Numbers (GSTINs) for each state or UT and file individual GST returns by using separate usernames and passwords for each jurisdiction. This has led to complex compliance procedures and a notable increase in related costs, especially due to the extensive reconciliations needed on a monthly and annual basis. Also Read: How India's GST revenues can sustain their incline On another front, the central government is working to address inter-governmental settlement issues related to IGST. Between April and July 2024, excess IGST allocations amounting to ₹10,659 crore were made to certain states. To resolve this, an internal committee has been set up that is chaired by the additional secretary of revenue at the Centre and comprises officials from both state and central governments. This panel aims to review the IGST mechanism and develop strategies for recovering these excess transfers. These developments highlight the operational complexities and financial implications associated with the implementation of GST, despite its overarching goal of creating a unified tax system. E-invoicing: The GST compliance process is largely digitized, with e-invoicing now mandatory for all business-to-business (B2B) transactions for taxpayers with an annual turnover exceeding ₹5 crore. There are plans to extend this requirement to all taxpayers and eventually to business-to-consumer (B2C) transactions. Once fully implemented, e-way bills should be eliminated. This move would significantly reduce the compliance burden for taxpayers and streamline operations, leading to faster turnaround times for transport vehicles and improved efficiency in the supply chain. Also Read: Mint Quick Edit | India's GST peak is reassuring PAN 2.0: The Union government recently unveiled plans to introduce PAN 2.0, an upgraded version of the longstanding Permanent Account Number system used by the Income Tax department as a unique taxpayer identifier. PAN 2.0 aims to modernize and streamline operations for businesses and citizens alike. The revamped system will leverage advanced technology to enhance efficiency, integrate PAN as a single identifier for specified business activities and introduce a unified portal for all PAN-related services. This presents an ideal opportunity to design a single GSTIN for taxpayers operating across India. Under this system, tax allocation can occur seamlessly at the back-end, using place-of-supply rules and data captured through e-invoicing. Such a framework would eliminate the need for an integrated GST administration across levels of governments under the GST Council. Since transaction-wise granular data would be available, GST revenues can be allocated equally between the Centre and states—and, on a destination-based principle, between states. Also Read: Simplify India's GST regime: The case for it is clear and it's time to act In this context, lessons can be learnt from the experience of other federal countries such as the United Arab Emirates (UAE), where a single VAT registration number is used for operations across all its constituent emirates. In the UAE, a unified VAT applies to intra-emirate, inter-emirate and import transactions without the need for separate registration in each emirate. India's next GST Council meeting should discuss this crucial aspect as well, since taking such simplification steps for GST compliance could significantly ease operational challenges for businesses and reduce administrative overheads, thus fostering economic growth by creating a more efficient and business-friendly tax regime. These are the authors' personal views. The authors are associated with the Pune International Centre (PIC), a think tank.
Mint
07-07-2025
- Business
- Mint
Arun Maira: Dedication to the state's purpose is the key lesson we must learn from China
India is at a crossroads. Both the political Left and Right agree that the economy needs substantial reform, but disagree on the direction. The progressive Left wants more socialism with more liberal democracy; the conservative Right wants more free-market capitalism and seems willing to tolerate curbs on liberty. The Middle seems muddled. The 20th century was a test of competing economic ideologies—socialism versus capitalism; and competing forms of governance—liberal democracy versus authoritarianism. When the Soviet Union collapsed in 1991, victory was declared for the Washington Consensus of free market capitalism and liberal democracy. India's reformers adopted the Washington formula in 1991. By and large, they gave up on socialism, abandoned industrial policies aimed at growing domestic industries and opened the Indian market for foreign companies without technology-transfer requirements. China did not yield. It stayed its socialist course with single-party governance and continued to build domestic industries. Also Read: Ajit Ranade: The success of 'Made in China 2025' alarmed the West The growth of China's economy is a miracle, economists say. In the 1980s, China and India's economies were comparable in size and per capita income. Now, China's per capita income and GDP are about five times India's. China's high-tech manufacturing sector has grown 48 times larger. The US, meanwhile, has grown alarmed with China's remarkable economic growth and industrial strength despite Beijing not following Washington's economic formula. That consensus has ended even in Washington, where ideological cracks have appeared with increasing inequality and unrest among workers in the US. The US is pressing India to come closer to it. India is wary. China shares a border with India that has seen the two armies skirmish. India must become self-reliant and stronger much faster than it has so far. Reforms must result in faster income growth among the Indian masses and stronger domestic industries. India's leaders should study China for lessons before pushing harder with economic reforms based on the West's failing model. Also Read: China began de-risking its economy well before Trump's trade fury US capitalism and Chinese socialism: Three recent books offer insights into how socialism and capitalism have been combined to achieve China's inclusive and fast growth. China's leaders are good learners, says German political economist Isabella M. Weber in How China Escaped Shock Therapy: The Market Reform Debate. Like Mahatma Gandhi, they kept their minds open, allowing ideas to come in from all directions without being blown off their feet. They listened to Western economists but applied only what suited China. Weber says, 'The famous Harvard development economist Dani Rodrik represents the economics profession more broadly when he answers his own question of whether 'anyone (can) name the (Western) economists or the piece of research that played an instrumental role in China's reforms" by claiming that 'economic research, at least as conventionally understood" did not play 'a significant role." Chinese economist Keyu Jin, a professor at the London School of Economics who grew up in China and experienced the Chinese system from within, explains how the Chinese socio-economic-political system works in The New China Playbook: Beyond Socialism and Capitalism. She explains why Western economic models, which strip out cultural and social forces from economics, cannot comprehend how China works—or even how Western economies work. She makes visible the 'invisible hand' that free-market economists cannot explain. She explains why the Chinese government keeps financial markets and the private sector reined in to ensure the market produces welfare for all, especially poorer and least powerful citizens. She says, 'The number of financial crises in China is exactly zero. It is also an oddity (from a Western perspective) that despite the nation's preternatural economic growth, its stock market has been one of the worst performing in the world." Also Read: Chinese history shows how a closed economy could squander a nation's greatness The Chinese government has added citizen satisfaction and environmental sustainability to GDP as a measure of its own performance (and of local governments). Though private firms grew nine-fold in China from 2000 to 2019 (their number now exceeds the US's by far), 'A more striking fact," says Lin, 'is that private owners with state connections owned about a third of the capital registered by these companies, showing how pervasive equity linkages between state and private businesses have become in China's corporate sector." While the government has reduced the number of state-owned enterprises and pushed the remainder to add profits to their social objectives, it also demands that private firms comply with societal needs. Large, private, property and tech firms that strayed from the socialist path have been cut down. Three distinctive features of China's governance: The purpose of the state, throughout China's long history from imperial times to the Communist era, has been the welfare of citizens. The best emperor was seen as one who provides the most welfare to all citizens, not one who wins the most wars. The leadership of the Communist Party has continued this role, says Chinese political scientist Zheng Yongnian in The Chinese Communist Party as Organizational Emperor: Culture, Reproduction, and Transformation. Jin explains further (in The New China Playbook) how the ruling party's commitment to this role has shaped Beijing's socio-economic policies, resulting in widespread support for the party even among the young. Also Read: Rahul Jacob: Manufacturing is crying out for a reality check The governance of China is highly decentralized. Local communities are given freedom to craft solutions suited to their needs; the performance of local party officials is measured by the satisfaction of their communities with progress. Chinese leaders and economists are 'systems thinkers.' They see the economy as only a component of a complex social system. For them, the purpose of economic growth is the production of societal well-being, especially for less powerful people. Whenever the economy begins to fail this purpose, reforms are made to bring it back to its socialist moorings. India must not slavishly follow Western models. Nor can India be China. India must find its own way to create a more equitable society. The author is a former member of the erstwhile Planning Commission and the author of 'Reimagining India's Economy: The Road to a More Equitable Society'.
The Print
04-07-2025
- Business
- The Print
Umakant Dash named new VC of Pune's Gokhale Institute of Politics and Economics
The position of Vice-Chancellor of GIPE had been lying vacant since economist Ajit Ranade's resignation from the post in November 2024. Dr Shankar Das is currently holding the interim post of VC at the institute. Dash will assume office for a term of five years effective from July 29, 2025, the institute said in a release. Pune, Jul 4 (PTI) Academician Dr Umakant Dash has been appointed the new Vice-Chancellor of the Pune-based Gokhale Institute of Politics and Economics (GIPE), the institute said on Friday. The GIP was established in 1930 by the Servants of India Society, a body founded by freedom fighter Gopal Krishna Gokhale in 1905. The 95-year-old institute has been in the eye of the storm for the last few months. It saw dramatic developments over the chancellor's post as well as the arrest of a functionary for alleged misappropriation of funds. According to GIPE website, it is the oldest research and training institute in economics in the country. The institute is dedicated to research into the socio-economic dimensions of Indian society and carries forward the legacy of Gokhale. Over the decades, the institute has established strong credentials in empirical and analytical research, said the website. The institute, registered under the Societies Registration Act, 1860, and the Bombay Public Trusts Act, 1950, was awarded the status of deemed to be a university in 1993. PTI SPK RSY This report is auto-generated from PTI news service. ThePrint holds no responsibility for its content.
Mint
02-07-2025
- Business
- Mint
China plus one: It's a moving target that India can still strike
China accounts for over 30% of global manufacturing output—a figure the UN estimates could rise to 45% by 2030. However, for global manufacturers, 'China Plus One' (CP1) has emerged in recent years as a strategic imperative to diversify supply chains and reduce overdependence on China. For countries like India, CP1 was seen as an opportunity to become a credible alternative. But that window is narrowing. Amid global trade uncertainty and tariff wars, the CP1 paradigm faces new challenges. For India to benefit meaningfully, CP1 must be treated as a foundation for long-term, policy-driven industrial growth. Also Read: Ajit Ranade: The success of 'Made in China 2025' alarmed the West CP1 was built on three key assumptions: that geographic diversification mitigates geopolitical risk; that complete decoupling from China is unrealistic; and that global supply chains are modular and relocatable. These three led the initial momentum. From 2020 to 2024, the share of Chinese goods in total US imports dropped from 18% to 14%, while countries like India, Vietnam, Mexico and Thailand attracted the interest of global manufacturers seeking diversification. Tariffs have intensified since under the trade-policy turn taken by US President Donald Trump. Some estimates suggest that effective US tariff rates on Chinese goods may exceed 50%, while CP1 countries such as Vietnam and Thailand could face duties of up to 46%. The cost advantage of producing goods outside China for the US market is in flux, with clarity awaited on how trade deals will reshape the picture. Thailand, for example, could lose up to $24 billion in exports if a proposed 36% US tariff is imposed, offering a cautionary tale of how fragile a country's CP1 hub status can be. Also Read: It's time for India's export strategy to converge its US and China tracks Whether CP1 remains viable will depend heavily on the outcome of US trade negotiations with China as well as 'plus one' hubs. If Chinese access to the US market does not materially diminish, CP1 hopefuls would see their prospects decline. Compounding this uncertainty is China's increasingly assertive posture. Beijing is unlikely to yield to what it views as containment efforts. As a strategic response, China has weaponized trade by restricting its exports of rare earth minerals, magnets and other critical inputs essential to a wide range of industries. China's leverage is formidable: nearly 40% of its exports to the US are in categories where it controls over half of America's imports. Yet, the US market represents less than half of China's export base in the same segments, giving Beijing room to retaliate without taking a severe blow. This asymmetry is one reason why the White House exempted products like smartphones and laptops from its recent tariffs, and later struck a mini-deal with China that saw both sides agreeing to lower tariffs and ease export curbs. Also Read: Rare earths: China is choking its own prospects of leadership Deeper structural challenges also threaten CP1 hopes. For one, ensuring genuine supply chain independence from China is increasingly difficult. As Chinese firms expand abroad, their integration into CP1 countries' manufacturing ecosystems increases the risk of hidden exposure—raising compliance and regulatory risks for global firms. Second, CP1 strategies are vulnerable to domestic political shifts. Countries like India and Canada are stepping up efforts to protect domestic industries from Chinese export surges and may pursue localization policies driven by local needs. To position itself as the world's top 'plus one,' India must act decisively across five policy areas. Expand infrastructure: Go beyond flagship corridors and ports to modernize last-mile connectivity, industrial parks and electricity reliability—core requirements for export-oriented factories. Strengthen trade diplomacy: India must pursue bilateral and multilateral trade agreements with CP1 countries and major export markets such as the US, EU and Japan. Without tariff predictability, even the best industrial policies risk being undermined. Ensure supply chain transparency: As the scrutiny of Chinese-origin inputs grows, India must support its manufacturers in certifying the 'non-China' origins of their inputs through robust traceability mechanisms and streamlined customs processes. Increase domestic value addition: Despite healthy export numbers, India's domestic value addition remains low—under 10% for premium electronics. Raising this share is critical to making the most of value chains. Invest in workforce development: To move up the value curve, India must address its skill gaps. Reaching our electronics manufacturing target of $300 billion, for example, will require training 8-10 million workers over the next decade. Also Read: China plus one: Apple and India might need to woo not just Trump but Xi too CP1 faces other headwinds. As Chinese firms expand into CP1 markets, supply chain independence becomes harder to verify. Host countries like India have their own economic and political constraints. Domestic protectionism and capital flow regulations further complicate the execution of a cohesive CP1 strategy. Today's CP1 environment is markedly different from 2020's. Global trade has shifted from prioritizing efficiency to emphasizing security; from cost optimization to control; and from globalization to guarded openness. India must adapt to this new paradigm. Low labour costs or incentive schemes are not enough to attract global manufacturers, which want geopolitical agility, regulatory stability and reliable infrastructure. India's window of opportunity is open but shrinking. India must respond with urgency, strategic vision and coordinated policies to fulfil its potential as the world's preferred destination for manufacturing. The author is a strategy and public policy professional. His X handle is @prasannakarthik
Mint
15-06-2025
- Business
- Mint
Ajit Ranade: West Asia's upheaval intensifies India's challenges of geopolitics
Next Story Ajit Ranade The Israel-Iran war will make it harder for New Delhi to navigate global turbulence even as an oil flare-up poses a threat. But it could also spur domestic policy changes—in favour trade diversification, for example—that strengthen our economy. The fallout of the hostilities: Over a hundred people already killed, cities plunged into fear, critical infrastructure damaged and diplomacy left in the rubble. Gift this article The world crossed a dangerous threshold on 13 June. Israel attacked Iran, targeting nuclear facilities, military bases and even residential zones in order to kill top military leaders and nuclear scientists. Israel sees a nuclear-armed Iran as an existential threat and says that Iran's uranium enrichment programme had reached a point where a nuclear weapon was just weeks away. The world crossed a dangerous threshold on 13 June. Israel attacked Iran, targeting nuclear facilities, military bases and even residential zones in order to kill top military leaders and nuclear scientists. Israel sees a nuclear-armed Iran as an existential threat and says that Iran's uranium enrichment programme had reached a point where a nuclear weapon was just weeks away. The enrichment, while in violation of Iran's commitment to complying with nuclear safeguards, as noted recently by the United Nations' watchdog, was still nowhere close to weapons grade, as per US experts. Hence Israel's unprovoked attack was a big shocker. Israel so far had stopped short of full-scale war, preferring sabotage, cyber-attacks and targeted killings. But now Israel has crossed a line of no return for itself, Iran and the world. Iran launched a counter attack with over 200 ballistic missiles. It aimed at more than 150 Israeli targets that included nuclear sites and residential zones. Also Read: Javier Blas: An Israel-Iran war may not rattle the oil market The fallout of the hostilities: 130 people already killed, cities plunged into fear, critical infrastructure damaged and diplomacy left in the rubble. This escalation by Israel into war has upended Middle Eastern geopolitics. What was once a high-stakes diplomatic standoff has now escalated into a military confrontation. This will likely spiral up, notwithstanding global voices for restraint. From a statement of US President Donald Trump, it is obvious that Israel had tacit American support, with all its military might. He has been drawn into making a choice that he would have rather avoided: i.e., choosing between playing peacemaker and backing Israel solidly. On the other hand, all the Gulf states have condemned Israel's strike. But some like Saudi Arabia and the UAE might be quietly relieved at Iran's weakened position. Riyadh is Tehran's rival in a quest for regional dominance. China has stayed pointedly silent. Iran is central to its energy security and infrastructure ambitions for the Belt and Road Initiative, but Israel is also a key technology partner. Maybe China wants to position itself as a non-interventionist peacemaker, striking a contrast with unconditional support by the US for Israel, the aggressor. This Middle East distraction for Washington can work to China's advantage, as it gains manoeuvring space to flex muscle on Taiwan and in the wider Indo-Pacific. Russia had asked for an immediate Security Council meeting and resolution, knowing full well that the US will stonewall it with a veto. Hence its condemnations have lacked force. The Shanghai Cooperation Organization (SCO), of which India is a member, has condemned Israel's attack, but India has carefully distanced itself from the SCO's common statement. Europe is alarmed by Israel, but not sympathetic to Iran, given the latter's record on enrichment. These actions of various international players reveal a global system where major powers are acting increasingly based on narrow transactional interests rather than any shared security architecture. It has injected fresh volatility into an already fragile global order. Israel has America's political, military and diplomatic support, whereas no major power is unequivocally with Iran. At most, it has ambivalent, conditional or weak support from various quarters. Non-state actors that could have aided it, such as Hezbollah and the Houthis, have been weakened. Hence, Tehran's resilience will be tested and it might resort to desperate measures. It has threatened strikes on the military bases of Israel's allies. These include US bases. It has also drawn attention to another lever of high-impact force with a threat to bar the movement of oil through the Strait of Hormuz, from where 20% of the world's oil flows. Meanwhile the Ali Khamenei administration is facing strong opposition at home, which Israel has sought to exploit. Instability in West Asia affects India deeply, for the stakes are immediate and structural. Some 60% of India's crude oil passes through the Strait of Hormuz. We have 8 million citizens in the Gulf region. Oil prices above $100 will worsen inflation, widen the current account deficit, hasten the rupee's fall and strain the fiscal deficit. Last year net inbound foreign direct investment (FDI) was almost negligible. Investors will now adopt a wait- and-watch attitude, thus hurting our growth prospects. New Delhi has to balance its energy security and Chahabar interests in Iran with its tech and defence partnership with Israel. It cannot remain silent on Israel's attack on Iran sovereignty because that would seem like moral abdication. This is the third such conflict where India finds itself locked in a narrow diplomatic navigation route and forced into a tight balancing act. Can New Delhi publicly and strongly condemn Russia in Ukraine? Can it condemn Israel's ongoing treatment of people in Gaza? It has to protect its strategic autonomy, while remaining a credible power with aspirations to UN Security Council membership and great power status. India's response reflects preference for non-alignment and quiet diplomacy. Also Read: Israel's war on Iran to hit Indian workforce India's foremost priority is the domestic economy, given our vulnerability to commodity prices, oil, exchange rates and investment flows. We cannot count on discounted Russian crude, not least because of the likely US reaction. Our free trade agreement with the UK will kick in next year, and a treaty with the US is uncertain. The big rate cut by the Reserve Bank surprised the market, but now in hindsight seems like a great pre-emptive strike. A large monetary stimulus will be useful ahead of signs of economic weakening. There is also massive liquidity injection. Prior to the present conflict, the 2025-26 GDP growth estimate of 6.5% was the lowest in four years. It might get worse, along with world growth, as even the World Bank's Global Economic Prospects points out. India's private sector investment-to-GDP ratio has been stagnating at 10% for a decade. A recent government survey of private sector capital expenditure intentions points to a decline this year. The government will have to keep up public capex to provide a growth impetus, as it has done in the past four years. On FDI, we must think creatively, as we need at least 2% of GDP on a net basis. New Delhi must revisit its stance on Chinese investment to allow it at least in non-sensitive sectors, such as automotive products (especially electric vehicles), infrastructure and renewable energy. Chinese exports can use Indian value chains. In the medium term, we need to diversify our energy sources and export markets. Our services export boom must go beyond Western customers. And, of course, we need a great thrust on building human capital, skilling and research. Paradoxically, the West Asian crisis might be an opportunity for India to emerge stronger with a bigger stature. The author is senior fellow with Pune International Centre. Topics You May Be Interested In Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
