New Delhi: Prime Minister Narendra Modi today drew attention to India’s historical trade inefficiencies while addressing the nation on the launch of the latest GST reforms, dubbed the GST Bachat Utsav. Highlighting the impact of the reforms on ordinary citizens, farmers, traders, and entrepreneurs, PM Modi traced the evolution of India’s trade and taxation system back to 2014, the early days of his premiership.
In his speech, the Prime Minister referenced an article published in the Financial Times by veteran South Asia correspondent Victor Mallet titled “Notebook: India is a nation in need of a trade deal with itself”. The piece highlighted the extraordinary hurdles companies faced in transporting goods within India. According to the 2014 report, a French technology firm reportedly found it cheaper to ship components from Bengaluru to Europe and then back to Hyderabad a journey spanning thousands of kilometres rather than transport them directly over the 570 km distance between the two cities.
“Friends, this was the situation at that time due to the complexities of taxes and tolls,” PM Modi said. “Millions of companies and citizens bore the brunt of these inefficiencies. Transport costs were passed on to consumers, impacting the poor the most. It was essential to free India from this labyrinth of taxes.”
Mr. Mallet’s 2014 article noted that logistics costs often exceeded the total wage bill for Indian manufacturers, particularly in textiles, and were far higher as a percentage of sales than international competitors. The World Bank at the time estimated that reducing delays caused by roadblocks and checkpoints could cut freight times by 20–30% and logistics costs by 30–40%. The article also cited Onno Ruhl, then World Bank Country Director, who described the implementation of a nationwide general sales tax as an opportunity for India to “conclude a free-trade agreement with itself.”
Fast forward to 2017, and PM Modi’s government introduced the Goods and Services Tax, a landmark reform aimed at unifying India’s indirect taxation system. Today, the Prime Minister unveiled the latest iteration of GST reforms, termed GST 2.0, which will come into effect on September 22, coinciding with the start of Navratri.
Describing the reforms as a “festival of savings,” PM Modi said, “From tomorrow, you will be able to buy your favourite items with ease. This is like a GST saving festival for every Indian.” He emphasized that the poor and the emerging middle class would benefit doubly from the latest GST rate cuts, bringing tangible relief to millions of citizens and businesses across the country.
The Prime Minister’s speech underscored not only the progress made in streamlining India’s trade and taxation over the past decade but also the government’s continuing efforts to enhance ease of doing business and ensure economic benefits reach every layer of society.