Ashwini Vaishnaw clarifies GST reforms are independent of global factors amid US tariff hike

Union minister Vaishnaw emphasized that the GST overhaul had been planned well in advance and is unrelated to international developments or US trade measures.

Union minister Ashwini Vaishnaw on Saturday dismissed speculation that India’s recent Goods and Services Tax (GST) reforms were influenced by global pressures, including the steep 50% tariffs announced by the United States.

Speaking to the press, Vaishnaw highlighted that the reforms had been under preparation for more than a year and were entirely domestic in origin. He stressed that the exercise was part of a long-standing commitment made by Prime Minister Narendra Modi, noting that it was a promise declared “from the ramparts of the Red Fort during Independence Day that has now been fulfilled.”

“The preparation for GST reforms had started about one-and-a-half years ago…before the US elections. This initiative was taken in line with PM Modi’s clear goal of reform, perform, and transform. This GST reform will start a transformation journey of the country,” Vaishnaw stated.

The GST Council, after its meeting on September 3, unveiled a major restructuring of the tax system, cutting through complex slabs and reducing rates across several categories. Under the new structure, most goods and services will now attract either 5% or 18% GST, with only sin and de-merit products continuing to face the higher 40% bracket. Many commodities that previously carried rates of 18% or 12% have been shifted to the 5% category, while several items earlier taxed at 28% have been brought down to 18%.

The timing of this move coincided with the US decision to impose a 50% duty on Indian imports, one of the highest trade penalties imposed on any nation. The tariff, announced by former US President Donald Trump through an executive order on August 7, adds a 25% surcharge on India’s purchases of Russian oil, in addition to the earlier 25% reciprocal duty. Despite this, the Indian government has maintained that the GST rationalisation is entirely a domestic reform aimed at streamlining the tax system and serving the broader public interest.

Prime Minister Modi described the tax reforms as a “game changer”, pointing out that simplified rate slabs, reduced input costs, smoother digital compliance, and growing demand will help boost the competitiveness of Made in India products.

Vaishnaw also underlined that India’s economy is moving in the right direction, with the combination of income tax relief provided in the 2025-26 Budget and the new GST framework expected to stimulate further expansion.

Meanwhile, Union agriculture minister Shivraj Singh Chouhan underscored the benefits of the reforms for the farming sector. He remarked that the government is working to cut down agricultural production costs and raise overall output. Addressing a press conference in Bhopal, Chouhan said, “Our aim is to reduce the cost of production in farming and increase production…The farmers of the country will get a big benefit from the GST reforms.”