trade notes

NOT-SO-FREE FLOW Politics Stall India’s Common Tax Bill BY V L SRINIVASAN

I

t was vaunted as an administrative measure that would promote exports, create jobs, boost growth, and save India US$15 billion every year. But the country’s proposed Goods and Services Tax, or GST, has suffered a major setback.

Trucks face numerous checkpoints on their journey across India. Credit: Asian Development Bank

Promising seamless transportation of goods including project and breakbulk cargo, the GST has been put on hold for at least a year, thanks to political bickering in the Indian Parliament. The failure in getting the bill passed is a big blow to Indian Prime Minister Narendra Modi’s economic reforms, as GST is at top of the list of demands from industry. The hurdle is also a setback for Modi’s pledge to improve India’s position in the World Bank’s “Ease of Doing Business Index” from 142 out of 189 countries in 2015 to the top 50 by 2017. The bill supporting the tax was passed in Lok Sabha, the Lower House of Parliament, on May 6, 2015, but the main Opposition Congress and its allies stalled its adoption in Rajya Sabha, the Upper House, for political reasons. Only after both Houses pass the legislation will the bill be sent to the President of India for his assent and then circulated among all 29 states for ratification in their respective legislatures. The ruling Bharatiya Janata Party, BJP, has a majority in the Lower House, but is woefully short of the same in the Upper House. The government needs at

64  BREAKBULK MAGAZINE  www.breakbulk.com

ISSUE 1 / 2016