GST Dhamaka Bombs Early

Good Morning. When does a festive gift become not so festive? Perhaps, when it comes two months too early. And that’s exactly what has happened with Prime Minister Narendra Modi’s Goods & Services Tax (GST) Diwali gift announcement. Markets were fired up by the idea, but consumer demand cooled. That too bang in the beginning of the festive season, when India sees the highest retail sales in the year. Not a timely gift after all? 

In other news, India’s spending is getting more premium. Meanwhile, in this week’s Build on Blockchain, how the technology could change the way health data is used and stored, all for the better.

THE TAKE

A Badly Timed Diwali Gift: Lessons From Modi’s GST Announcement

Prime Minister Narendra Modi, in his Independence Day address two weeks ago, announced a major overhaul of India’s GST system with significantly lower rates this Diwali, which he described as a major festive gift from the Centre.

"I am going to give a great gift this Diwali. Over the past eight years, we implemented a major GST reform and simplified taxes. Now, the time has come for a review. We have conducted it, consulted with states, and are set to introduce a ‘next-generation GST reform’," he said in his Red Fort speech.

The proposal was to reduce GST to two tiers — 5% and 18%. Right now, there are four tiers of 5%, 12%, 18% and 28%.

The markets were predictably pleased, auto and consumer product stock prices shot up as analysts rerated the companies, for the likely spurt in sales, thanks to lower prices.

Demand Slows 

But the announcement, well-intentioned as it was, has led to problems that may or may not have been anticipated. Demand has slowed down across most categories that could benefit from the lower tax rates. 

Because who wants to buy an air conditioner or refrigerator or even a small car when you could save thousands of rupees in just a few weeks? 

Not the value-conscious Indian consumer for sure. 

Remember, this year Diwali is on October 21, which is earlier than usual and with the festival season having started on Ganesh Chaturthi, which was August 27, it is a shorter festival season this year. 

No wonder the industry is concerned.

Wait And Watch

A Grant Thornton Bharat analyst told Business Standard their internal estimates suggested a potential 25-30%  impact on high-ticket segments like air conditioners and refrigerators if GST clarity is delayed. 

For instance, a Rs 1.2 lakh smartphone could become 10% cheaper post-reform, prompting buyers to delay their decisions.

Reports also quoted several auto dealers saying their sales had slowed down in anticipation of rate cuts.

The rate cut rumours started flying so thick and fast that the government itself had to step in.

The Central Board of Indirect Taxes & Customs (CBIC), which administers GST and reports to the Ministry of Finance, posted on X, kindly requesting that speculation on GST rates be avoided.

“Decisions in this regard are taken collectively by the GST Council, which comprises the Centre and States. Premature speculation gives rise to baseless rumours and may cause volatility in the markets.”

It then requested all stakeholders to wait till after the meeting of the GST Council. 

The CBIC did not acknowledge that the rate speculation would not have begun if its top boss, that is, the prime minister, had not announced the intent to cut rates to start with.

Lessons For Next Time

Meanwhile, Reuters reported on Monday that GST rates could be cut by at least 10 percentage points on some 175 products from daily use goods to small cars, small petrol hybrid cars, air conditioners and televisions.

You can’t stop people from speculating, and you can’t stop people from holding their purses back.

There will be rate cuts, no doubt, and they will do their job of firing up purchases, bringing some festive smiles into Indian consumers and investors in auto and consumer stocks. And fewer GST slabs are good for the economy and much needed, including as an economic counter move to the Trump tariffs, which hit around 12 days later after the speech.

The question really is if the announcement could have waited a little longer for a more optimum impact, or at least a shorter duration between likely implementations. 

That’s a lesson for next time.

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BUILD ON BLOCKCHAIN

Could Being (a) Patient Actually Reward You? Blockchain Says Yes

What? 

Health records are personal and valuable data. Yet, in India, they are scattered all over the place — home cabinets, inboxes, diagnostic labs or hospitals. 

This haphazard system to store medical data is no doubt inconvenient for patients, but the problem does not end there. It also makes the work of researchers, health experts, and pharma companies a tad tedious.

Scattered health data means it’s that much harder to study diseases, discover better treatments, or spot early signs of outbreaks.

Meanwhile, valuable medical data either lies unused or gets sold surreptitiously to third parties, invariably without the consent of the patient.

It doesn’t have to be this disorganised. 

Why? 

RS Sharma, the first Director General of UIDAI and former CEO of the National Health Authority tasked with managing public health insurance, recently told The Core that blockchain will help store health records securely, track who’s accessing them, and make sure patients are the ones deciding who gets to see them.

“If the patient has to be in control of that data, then it is important that the records are put on a blockchain so that the patient is able to share his or her own data with any service provider — the doctor, the pharmacy, or the diagnostic lab,” Sharma said. 

Optionally, this data could also be anonymised and stripped of personal info before joining a big pool of health records, accessible to universities, pharma companies or government bodies for research purposes.

What Can Change 

India has taken baby steps. In 2021, IIT Madras came up with BlockTrack, a blockchain platform, to store and share medical data. 

The system allowed patients, hospitals and doctors to access medical files without any delay or gaps, resulting in better coordination and improved diagnosis.

But that’s just a pilot at best with no provision for a payoff to the patient. For a country like India, there is scope to do much more.

CORE NUMBER

Rs 98,000 crore

That’s the value premium brands now contribute to India’s FMCG spending, according to Worldpanel by Numerator's (formerly Kantar) Consumer Connections 2025 survey.

📌 The details:

• Premium products now make up 15% of India's total FMCG spends. 

• Categories driving this include detergents, soaps, haircare, toothpaste, edible oils, skin creams, biscuits, and basmati rice.

• Super premium buyers are moving their spend from essentials like groceries and dairy to lifestyle-led categories such as housing, travel, luxury cars, smartphones and home décor.

• Small packs are driving penetration, as they have done for other categories earlier, in the adoption of premium products. 

🧾 Why it matters:

Rural India is contributing to the premium FMCG segment like never before, and has seen significant growth in five years: from 30% in 2021 to 42% in 2025 for super-premium categories and over 50% for affordable premium.

💬 Insight: "The future will be about delivering value-led premium experiences through the right packs, right attributes and right channels. For brands, this is both a challenge and a golden opportunity," said K Ramakrishnan, managing director-South Asia at Worldpanel by Numerator. 

FROM THE PERIPHERY

India and US Play Frenemy Politics

India is currently in talks with the US on a trade deal, Piyush Goyal, India’s Minister of Commerce, said at the CII Global Sustainability Summit on Tuesday. In light of the US’s 50% tariffs on Indian goods, Goyal added that the government is helping exporters diversify markets too. 

Catch Up Quick: In fact, Indian PM Narendra Modi recently attended the SCO (Shanghai Cooperation Summit) summit in Tianjin, China, where he met with the heads of states of Russia and China. In a show of solidarity, China and India promised to work on their mutual relationship, and Modi also spoke of India’s partnership with Russia in turbulent times. Images and videos of Modi, China’s Xi Jinping, and Russia’s Vladimir Putin made headlines. 

Pivot: Soon after, US president Donald Trump posted on Truth Social, accusing India of maintaining an unfair relationship with the US and supporting Russia by buying its oil. White House trade adviser Peter Navarro also criticised Modi’s decision to meet Xi Jinping and Vladimir Putin, adding that he hopes that Modi “comes around to seeing that he needs to be with us, Europe and Ukraine not Russia.” 

GST Council Eyes EVs

India may soon make luxury electric cars more expensive. A Goods and Services Tax (GST) panel has proposed steep GST hikes on high-end electric vehicles (EVs), potentially hitting Tesla, Mercedes-Benz, BMW and BYD. Rates could rise from 5% to 18% for cars priced Rs 20–40 lakh ($23,000–$46,000) and up to 28% for those above Rs 40 lakh ($46,000), arguing they cater to the “upper segment” and are largely imports.

What’s Next: Prime Minister Narendra Modi is rolling out sweeping tax reforms aimed at promoting domestic goods and easing consumer costs. His government has recommended hefty GST cuts on daily-use items such as shampoos and electronics. The GST Council, meeting scheduled September 3–4, will decide whether to adopt the hikes or push luxury EVs into a new 40% tax slab.

Outcome: While Tata Motors and Mahindra dominate India’s EV market, global luxury carmakers face the sharpest blow. Tesla’s newly launched $65,000 Model Y is especially vulnerable.

SEBI Introduces New Intraday Trading Rules

Indian markets regulator, the Securities and Exchange Board of India (SEBI), has set new rules to control big bets in intraday index options trading, according to an official statement by the markets regulator. Starting October 1, traders cannot cross Rs 5,000 crore in net positions or Rs 10,000 crore in gross positions during the day. 

What’s Next? Exchanges will now check positions four times daily, including in the last trading hour, so traders cannot hide oversized bets until closing. If someone breaks the rules, especially on expiry days when trading is most hectic, they may face fines or extra charges. 

Implications. This comes soon after SEBI banned US firm Jane Street for unfair trading, showing its focus on protecting small investors.

PODCASTS

Market Pause

On Episode 667 of The Core Report, financial journalist Govindraj Ethiraj talks to Indrani Bagchi, CEO, Ananta Aspen Centre as well as Cameron Johnson, partner at Tidalwave Solutions and a global supply chain strategist.

• Market pause

• Bonhomie and camaraderie in Tianjin, now what?

• The new global supply chain dynamics

• Tesla has received only 600 orders since its launch in mid-July

THE TEAM

✍️ Zinal Dedhia, Kudrat Wadhwa | ✂️ Rohini Chatterji | 🎧 Joshua Thomas

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