On the 15th August 2025, Honourable Prime Minister Narendra Modi announced that India would undertake far-reaching reforms in India’s Goods & Services Tax (GST) aimed at further simplifying the taxation system with significant positive impact on India’s foreign trade, especially in sectors like pharmaceuticals, medical equipment, agricultural commodities and equipment, textile and apparel and other commodities with major share in India’s exports.
These reforms would come into effect from 22 September 2025, coinciding with the festive season in India. The new GST reforms envisage revamp of the GST structure by rolling out GST 2.0 based on three core pillars: structural changes, rate rationalization, and procedural simplification.
The new GST regime seeks to streamline the system into two main slabs: 5% and 18%, besides a new 40% rate for luxury and sin goods. The previous 4-tier GST system, which commenced in 2017 and included higher 12% and 28% slabs, stands abolished. This rationalization is undoubtedly a bold step in tax reforms, reinforcing India’s intent to emerge as a major exporter of commodities including pharmaceuticals, medical equipment, agricultural commodities and equipment, textile and apparel. India has proven expertise and strengths in these sectors. The new reforms would facilitate new investment and growth sustaining India’s impressive growth trajectory. It also signals to global markets that India has a predictable investor-friendly tax environment.