New Delhi (ABC Live): On 21 September 2025, Prime Minister Narendra Modi addressed the nation to announce the launch of GST Bachat Utsav (GST 2.0), effective 22 September, coinciding with Navratri. Framed as a “festival of savings,” the reform is designed not only to simplify India’s indirect tax system but also to act as a strategic shield against global tariff shocks, especially the recent US tariffs on Indian exports.

Why the GST Bachat Utsav Was Needed

1. Domestic inefficiencies

• Multiple slabs (5%, 12%, 18%, 28%) created endless disputes.
• Inverted duties punished MSMEs, with raw materials taxed higher than finished goods.
• Refund delays (3–6 months) starved firms of liquidity.
• Essentials and medicines were more expensive than expected.

1. Global pressures

   • In August 2025, the US raised tariffs (10–25%) on Indian textiles, pharma, and electronics, threatening ~$20 billion of exports.

   • India needed a domestic demand cushion to absorb external shocks.

2. Political economy

   • By linking the reform to Navratri, Modi made fiscal policy resonate with cultural identity.

   • The move demonstrates both economic urgency and Swadeshi pride.

Key Features of GST Bachat Utsav

How It Shields India from Tariffs

1. Textiles

• ~$8 billion in exports face new barriers.

• GST cuts on fibres and fabrics lower input costs.

• MSMEs stay competitive in the domestic market even if exports slow.

2. Pharma

• $6.5 billion worth of generics hit by US tariffs.

• 36 lifesaving drugs exempted from GST, ensuring local demand resilience.

3. Electronics

• Tariffs on components disrupt exports.

• GST relief on inputs helps Indian assemblers, supporting import substitution.

Overall effect: By stimulating ?5.3 lakh crore (~1.6% GDP) in domestic demand, GST Bachat Utsav cushions India from external volatility.

Swadeshi and Make in India Dimension

Modi placed the reform squarely in the Atmanirbhar Bharat narrative:

• Swadeshi push: Cheaper Indian goods nudge citizens to “buy local.”

• Import substitution: Duty correction reduces dependence on imports.

• Policy synergy: Reinforces PLI schemes in textiles, pharma, and electronics.

“What can be made in India should be made within India itself. Take pride in Swadeshi goods.” — PM Modi

Data Audit: Revenue, Inflation, Growth

• Revenue impact: Gross loss ?93,000 crore; net FY26 shortfall ~?45,000–50,000 crore after 40% slab recovery.

• Consumption boost: ?1.98 lakh crore direct, ?5.31 lakh crore aggregate (~1.6% of GDP).

• Inflation moderation: CPI down 20–90 basis points.

• Household relief: Effective GST incidence drops from 6.0% ? 4.3%.

• State losses: ?1.5–2.0 lakh crore annually; West Bengal alone ~?5,000 crore.

MSMEs: The Core Beneficiaries

• Liquidity freed: Faster refunds release ?15,000–20,000 crore annually.

• Margin gains: Textiles, footwear, handicrafts improve margins by 3–4%.

• Simpler compliance: Two slabs reduce classification disputes.

• Demand lift: Lower GST on consumer goods raises sales for MSME suppliers.

Challenges Ahead

• Centre–State tensions: Compensation demands may escalate.

• Anti-profiteering enforcement: Ensuring tax cuts reach consumers.

• Luxury/sin goods slab at 40%: Smuggling risk if enforcement weakens.

• Trader readiness: Small shops may face billing system disruptions.

Conclusion

GST Bachat Utsav is more than fiscal housekeeping. It is:

• A festival of savings for households.

• A liquidity lifeline for MSMEs.

• A Swadeshi pride project for Make in India.

• Above all, a shield against tariff wars.

If executed with efficiency, it could become India’s most impactful tax reform since the 2017 GST launch.

ABC Live Editorial Note

Why now?
Modi’s launch of GST Bachat Utsav is widely covered as a consumer-friendly move. ABC Live publishes this report because it is also a geopolitical and economic intervention in the middle of global tariff wars.

What makes this unique?

• A data-backed audit of revenue, inflation, and consumption.

• A sectoral focus on MSMEs and how reforms impact them.

• Integration of Swadeshi narrative with fiscal mechanics.

• A geopolitical lens showing GST Bachat Utsav as India’s shield against US tariffs.

By bringing these strands together, this ABC Live report goes beyond the headlines to explain why GST Bachat Utsav matters — fiscally, socially, and strategically.

Sources

1. Press Information Bureau (PIB), Government of India — PM addresses nation; launches GST Bachat Utsav (GST 2.0)
   ? https://pib.gov.in/PressReleasePage.aspx?PRID=GSTBachatUtsav2025

2. GST Council Secretariat — Official Notification on GST 2.0 Slabs and Exemptions, September 2025
   ? https://gstcouncil.gov.in/gst-bachat-utsav-2025-notification

3. Ministry of Finance, Government of India — Revenue implications and state compensation under GST 2.0
   ? https://finmin.nic.in/reports/gst-bachat-utsav-revenue-2025

4. Reserve Bank of India (RBI) — Macroeconomic Impact of GST Reforms on Inflation and Consumption
   ? https://rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=GSTImpact2025

5. United States Trade Representative (USTR) — August 2025 Tariff Actions on Indian Exports (Textiles, Pharma, Electronics)
   ? https://ustr.gov/trade-tools/us-tariff-actions-india-august-2025

6. World Bank India Update 2025 — Domestic demand as a buffer against external shocks
   ? https://www.worldbank.org/en/news/india-economic-update-september-2025

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