Modi gives tax boon to India's economy amid Trump tariff tensions

The news was also reported by local media."The reforms aim to simplify compliance, lower tax rates, and modernise the GST framework to make it more growth-oriented

Industry executives expect measures such as rationalising rates into two slabs, easing the tax burden on micro, small and medium enterprises (MSMEs), cutting levies on essential goods, and using nology-driven cesses pre-filled returns and faster refunds to encourage investment," the India Brand Equity Foundation said, adding that manufacturing, logistics, housing and consumer goods could stand to gain.India's autos industry could also emerge as one of the beneficiaries of the new tax policies after a sluggish stretch in recent months

Sales of India's passenger vehicles, which include cars, added 4.2% percent in the 2024 calendar year, the Society of Indian Automobile Manufacturers said in January – the slowest growth pace in four years, according to Reuters.Auto sector stocks saw increases during the Monday session, as Maruti Suzuki India adding 8.75%, while Hyundai Motor India rose by 8.15%."I'm certainly positive the announcement, and the autos sector being a relative laggard in recent quarters, so not surprising to see that sector bounce back quite strongly," James Thom, senior investment director on the Asian equities team at Aberdeen, told CNBC's "Inside India on Monday."watch now2:1702:17India's consumer tax overhaul could offset U.S. tariff pains, Aberdeen saysInside IndiaModi's tax overhaul could shore up India's economy, which the Reserve Bank of India sees growing 6.5% in the 2025-2026 fiscal year, at a time of deep geopolitical uncertainty stoked by Washington's sweeping so-called "recical tariffs." New Delhi in particular has fallen in the crosshairs of U.S

President Donald Trump's administration over its purchases of Russian crude, with Washington imposing an additional 25% levy on Indian imports — bringing total duties to 50% — due to take effect at the end of this month."India is a domestic consumption story

Exports is a relatively small contributor

So this [tax overhaul] could more than offset that impact of tariffs," Aberdeen's Thom said."From a fundamental standpoint, absolutely, I think the changes to the GST regime will be supportive near-term for consumption as it comes through later in the year

And consumption has been weak in India for quite some time now, so this is a real of boost to the economy, if you , given India's economy is so dependent on domestic consumption."Domestic intake is "one of the most compelling indicators investors are closely monitoring," and the "largest driver of economic growth in India," with a 61.4% GDP contribution in the 2024-25 fiscal year, Deloitte said in an August report."Notably, urban consumption and a shift in spending preferences toward luxury goods are emerging as key pillars of this momentum," it said.India Ratings & Re meanwhile forecast India's private final consumption rate in the fiscal year to the end of March 2026 will expand by an annual 6.9%, outpacing a broader 6.3% GDP growth outlook over the period, on the back of low real wage increases, declines in household savings and a boost to personal loans."A sharp decline in inflation has imved the spects for stable consumption growth in FY26," it added