'India will now show them what a dead economy looks like': Zoho's Sridhar Vembu hails GST reform

Zoho founder Sridhar Vembu on Thursday praised the GST reforms approved by the Council, calling them the right policy mix to stimulate demand and strengthen domestic production. He also, in an apparent reference to US President Donald Trump, said that India now would tell what a dead economy look like.

"Cutting taxes to stimulate domestic demand, and encouraging investment in domestic production so the increased domestic demand creates employment — exactly the right mix. We could afford this mix precisely because our government has been generally prudent. We will show them what a 'dead economy' looks like," Vembu wrote on X, signalling confidence that India's reforms would unleash growth.

His comments came a day after the GST Council, chaired by Finance Minister Nirmala Sitharaman, approved a radical overhaul of the indirect tax regime. From September 22, GST will operate under a simplified two-slab structure of 5% and 18%, with a special 40% levy for luxury and sin goods. The decision eliminates the existing 12% and 28% brackets and slashes rates on nearly all daily-use, healthcare and education essentials.

Personal health and life insurance policies, previously taxed at 18%, have been fully exempted. The finance minister described the move as a reform “focused on the common man,” stressing that “labour intensive industries, farmers, and the health sector will benefit.”

Vembu was not the only prominent voice welcoming the decision. Kotak AMC MD Nilesh Shah called the reform “ek teer kai nishaan,” or one arrow achieving multiple goals. “GST slab consolidation and rate rationalisation lowers inflation, increases growth, boosts consumer sentiment, doesn’t disturb fiscal consolidation, improves ease of doing business, and partially offsets adverse effects of unfair US tariffs,” Shah said.

He pointed out that the estimated Rs 48,000 crore fiscal cost was "manageable at ~7 bps. "Rationalisation of GST will partially help offset the adverse impact of US tariff in the quarters to come with increased consumption," Shah said. He also highlighted the speed of the consensus: “Completing two days GST council meeting in one day does show the urgency.”

While hailing the decision, Shah cautioned that leakages and fraud under GST must be tackled firmly. He also warned against the “misallocation” of savings into risky speculation and ponzi schemes, which, he said, “costs more than four-five times the GST gift.”

The broader reform, first promised by Prime Minister Narendra Modi in his Independence Day address, comes at a time when India's exports face steep 50% tariffs from Washington — among the highest in the world. Economists estimate the GST rationalisation could add up to 0.5 percentage points to GDP growth by its second year, helping neutralise the blow of US duties.

With rates on items ranging from shampoo and soap to televisions, ACs, tractors, and cement all reduced, the reform is expected to spur consumption in an economy where private spending accounts for over 60% of GDP.