India Inc eyes key reforms in Union Budget 2025: Focus on GST, manufacturing and boosting consumption

With only two weeks to go for NDA 3.0 to present its second full budget, India Inc. has a long list of reforms they expect Union Finance Minister Nirmala Sitharaman to address as she delivers her eighth budget speech. On the indirect tax front, the industry will be keenly watching for more measures to support manufacturing, protect the domestic industry through duty benefits, and introduce further ease of doing business initiatives to reduce compliance under the Goods and Services Tax (GST).

Manoj Mishra, Partner at Grant Thornton Bharat, says, “With the Union Budget 2025 on the horizon, the spotlight is on indirect tax reforms to sustain India’s growth momentum and drive compliance efficiency. Recent GST collections consistently exceeding ₹1.6 lakh crore highlight the success of measures taken to enhance compliance and digitisation. The industry anticipates targeted rate rationalisation, enhanced digital integration, and procedural simplifications to reduce compliance burdens and promote ease of doing business.

Additionally, discussions in recent GST Council meetings have highlighted the need for measures to curb litigation and ensure uniformity in interpretations. On the customs front, a potential amnesty scheme akin to the ‘Sabka Vishwas’ initiative could resolve legacy disputes, while expanding the scope of advance rulings and simplifying CAROTAR compliance would facilitate smoother trade operations and align with India’s growing global trade ambitions. As we approach this pivotal budget, integrating taxpayer-friendly measures with robust revenue generation policies will be critical to balancing economic growth and fiscal prudence.”

Demand to boost consumption

On the other hand, long-standing demands to boost consumption in the slowing economy persist. Shriti Malhotra, Group CEO of Quest Retail, which houses The Body Shop, says: “As we look ahead to the Union Budget 2025-26, The Body Shop India remains hopeful for policies that will uplift the retail sector, especially fostering youth employment, sustainable practices, and inclusivity in hiring. Private consumption is the cornerstone of retail growth, and we look forward to government policies that will open up the purse strings of consumers through higher tax exemption slabs and reducing GST on essential personal care products. This would provide much-needed relief to the middle class, boost disposable incomes, and help consumers afford high-quality, ethical products that align with their growing preference for quality and sustainable choices.

We also urge the government to prioritise incentives for green initiatives, such as supporting retailers adopting sustainable packaging and energy-efficient retail operations. Furthermore, expediting the implementation of a National Retail Policy is critical. Simplifying compliance processes, improving logistics in Tier 2 and Tier 3 cities, and providing targeted incentives for small retailers can create a more level playing field. Investments in retail skill development programs, particularly in digital marketing and technology, are essential to building a future-ready retail sector capable of meeting evolving consumer expectations.”

Prioritising skill development and job creation

Bharat Dhawan, Managing Partner at Forvis Mazars in India, a leading audit and assurance, tax, and advisory firm, said, “India’s strength lies in its people, and the country has abundant opportunities for its youth. We expect the government to continue prioritising skill development and job creation to tap into India’s demographic advantage, which will drive economic growth and increase consumption through higher incomes. While the challenge of inflation, particularly food inflation, remains a concern, there is a need to implement robust supply-side measures to alleviate this pain. In the short term, direct benefit transfers (DBTs) may help support rural consumption. Infrastructure development will also remain a key priority, with continued investment in roads, multi-modal logistics parks, and overall logistics. Additionally, the government will emphasise healthcare, education, and skills development, while also promoting innovative technologies for inclusivity, formalisation, and transparent governance. As India aims to become a ‘Viksit Bharat’ by 2047, sustained investment in social, physical, and digital infrastructure will be crucial for future growth.”

Manufacturing and measures to support the ‘Make in India’ programme are among the most anticipated requests.

Sunil Kalra, Partner at Governance, Risk, Compliance, and Forensic Investigation Services at Forvis Mazars in India, emphasised that the Union Budget 2025 holds immense significance for India’s manufacturing sector as the country strives to achieve its $2 trillion export target by 2030.

Fostering innovation via Industry 4.0 technologies

“To enhance global competitiveness, we expect measures such as tariff rationalisation, duty exemptions, and expanded remission schemes to lower production costs and boost exports. Simplifying compliance procedures is also crucial to streamline operations and attract greater foreign investments. Targeted incentives for high-value manufacturing sectors like electronics and precision machinery, alongside support for labour-intensive industries such as textiles, footwear, and food processing, can drive rural development and create widespread employment. Additionally, fostering innovation through the adoption of Industry 4.0 technologies like AI, digital twins, and 3D printing will position India as a hub for advanced manufacturing. We hope the budget introduces a visionary roadmap that propels the sector toward sustainability, agility, and leadership in global supply chains, fueling inclusive economic growth.”

Brijesh Kothary, Partner at Khaitan & Co, also added, “A key challenge faced by the industry from an indirect tax perspective is the delay in obtaining registration and processing refunds under the GST regime. These delays negatively impact the ease of doing business. Simplifying the eligibility criteria for input tax credits (ITC) and reducing the restrictions on its availment would help reduce disputes over ITC claims and ease liquidity pressures on businesses, especially MSMEs, while also enhancing their cash flow. Offering indirect tax exemptions or rebates for businesses investing in infrastructure and research & development sectors can drive economic growth. Lower customs duties and GST rates on capital goods can incentivise industries to invest in new technologies and expand their production capacities. Rationalising customs duties on essential raw materials can lower production costs for industries, particularly in sectors like electronics, manufacturing, and automotive.”

It remains to be seen what exactly Finance Minister Nirmala Sitharaman announces on 1st February.

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