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Impact of GST on Manufacturing sector in India

As we know the Indian Economy is divided into three parts i.e.
1. Agricultural 
2. Service
3.Manufacturing 

In this blog, we are going to discuss the impact of GST on the manufacturing sector.

In early stages, the agricultural sector was the most contributor for the economy, but this scenario is soon got changes as the Narasimha committee presented the LPG in India in 1990 ( Liberalization, Privatization, Globalization ). This creates a new boom in the Indian economy and soon after we saw the results as service sector started holding the grip on the economy. This is going great for the service sector, but the manufacturing industry is not responding as per the expectations. There is little noticeable difference, but it surely surpasses the agricultural industry, but it's not up to the mark many times government try to help this sector via globalization, reduction in tax and creating specific zones.
It is a theoretical part but still, we can see the service sector is contributing 50% in total GDP, and with this scenario, we actually over depending on one industry and cause our GDP is not reaching its potentials. We can achieve more growth if our manufacturing sector starts also performing for this PM Narendra Modi began to 'Make in India' campaign with the aim to be the 5th largest manufacturing country in the world by 2020. 

Following are some points on the effects of GST on the Manufacturing sector 

* GST will remove the Cascading effects of the tax. There will be only one tax so people will not have to pay different charges to the govt.

* GST gives a single registration process as there will be a no different type of registrations for manufacturing of goods 

* Main point is that now more manufacturing industries will come under the tax regime

* GST will remove different prices of goods in a different part of the country as single tax will be levied all over the country 

To understand it better I am giving you diagram.





                                                                                            
·         Indian manufacturing sector’s gross value added at basic prices based on 2011-12  price series was the US $ 350.4 billion in 2016-17
The ·         Manufacturing sector grew at a CAGR of  9.87% between FY 12 and FY 17
·          The industry rose 9.33% in FY 17.





                                                             


Manufacturing Sector performing with the other sector
·         Indian manufacturing sector recorded the highest gross capital formation behind real estate at US$ 102.96 billion in 2015-16
·         The sector’s contribution to the Indian Gross Domestic Product was 16.51% in 2016

As we see above our manufacturing sector is giving the positive response to new tax system but talking about anything about the results will not do justice with the new system as we cannot reach Mars by next morning it will take time, but as we see now, it had shown us the positive response. I will keep updating my blogs as I get new data. 
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Location: Mumbai, Maharashtra, India

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