India GST: one nation, one market, one tax

India GST – the great battle has been won!

A couple of weeks ago I mentioned how often I write about GST (Goods and Services Tax) with hope and optimism of the bill being passed. Well, it gives me great pleasure to report the passing of the GST bill this week. Although in reality, this is just the start, there are so many positives to look forward to which will ultimately materialise through the implementation of the new tax regime. This has been 10 years in the making and as you can imagine there was a lot of political muscling to get us to where we are today. In practical terms, there are many layers that will need to be administered for this one tax regime to work. To ensure momentum isn’t lost, one of these challenges is definitely going to be the speed at which GST can be enabled. In fact, the government is very keen to roll it out by 1 st  April 2017 which will, of course, allow India to benefit more rapidly from growth as a result of this speed. Implementation of GST will inevitably revolve around an optimum rate being introduced to ensure the desired effect of this new regime is fully achieved. Even if longer term GST is seen as a huge success, which I believe it will be, the initial understanding will inevitably result in winners and losers across sectors. The start up world is clearly one of these and although the initial thoughts are of a welcome embrace to this progressive change, for small businesses it’s inevitably a matter of the small print. That said the possibilities for start ups are also being unearthed – none more so than the possibility of pan-India trade as long as the government ensures the eco-system is well considered. Given how much the government has supported the start up world in India to date, it would be a big surprise to see anything but a well-considered implementation of GST for Start Up India. What better validation than from those entrepreneurs directly in the line of fire; with these 10 giving their views on why they welcome GST. Let me finish off by putting some perspective on just how lucrative a well implemented GST could be for India. Not only is GST expected to create transparency and improve the ease of doing business but is also expected to propel GDP growth by as much as $200 billion. I hope now you see just why I think this is such an important reform and positive change for India. Now we will need to sit back and see just how well the government execute on their plans and promises.

The big story from outside India was the $35 billion deal struck between Uber China and China’s Didi in the taxi hailing sector. To prove just how complicated this space is in terms of deals done and alliances formed, take a look at this very interesting graphic. Although Didi and Uber are now allies (of sorts) there doesn’t seem to be any slowdown of strategies that were being explored prior to the deal as Didi continue to back Southeast Asian ride-sharing service Grab putting even more pressure on Uber.  With Didi being an investor in India’s very own Ola there were predictably questions raised as to how this will impact the current battle for supremacy with Uber, taking place in India. The potential silver lining is being touted for the smaller online aggregators in India. After almost admitting defeat in China with the tie up with Didi, one thing is clear; Uber cannot afford to lose India.

So often when I speak to people about India one of the biggest affirmations I relay is the quality of the entrepreneurs. I strongly believe there is so much top quality talent in India that in time the world will definitely stand up and take note. But what makes these entrepreneurs distinguish themselves is the mentality to get things done no matter what it takes – another way of saying this is Indian Jugaad! With this ability to execute you will not be surprised to hear large firms as well as start ups have been taking office space at a fast pace. Very often you might read about how the main hubs in India for start ups are Bengaluru (aka Bangalore), Mumbai and Delhi. To give some recognition to another very strong start up city – Hyderabad has been thriving. There is some belief that within the next few years, the Hyderabad start up eco-system will be bigger than that of Bengaluru. The more the better if you ask me as ultimately India will benefit!

Author: Dishang Pateldish-colour