INDIA ABROAD July 7, 2017 34 BUSINESS
India’s biggest tax reform rolls out
to Silicon Valley welcome
By Ritu Jha
rime Minister Narendra Modi’s
visit to the United States came
on the eve of India’s rollout of
the nation’s Goods and
Services Tax, considered the
nation’s biggest tax reform
and, in the eyes of many business lead-
ers, a transformative move.
It has created a buzz among entrepreneurs and venture capitalists from the
Silicon Valley, including Google CEO
Sundar Pichai, who was part of the June
25 CEOs’ roundtable with
Modi in Washington. He
said he was looking forward to the July 1 rollout
of GST and called the
move a testimony.
By offering one indirect tax for the nation,
the GST will make India
one unified market,
which experts and
investors in Silicon
Valley say will lead to an
ease of doing business.
Walmart India’s pres-
ident and CEO Krish Iyer
called it a “game changer.”
“It is a very progressive step by the
Indian government and doing business
in India will definitely become much
easier,” said Navneet S. Chugh, manag-
ing partner of Chugh, LLP, an interna-
tional law firm, who also attended the
GST is replacing nearly 14 laws,
including excise duty, luxury tax, service
tax, special additional duty of customs,
value added tax and central sales tax.
Many Silicon Valley investors, as service-based industries, use the offshore facilities of their Indian operations. Since
exports from India are not subject to
GST, they will not get affected directly.
However, if defense- or product-based
companies such as Apple or Lockheed
Martin decide to move the manufacturing facility to India, GST is expected to
make it easier for them to do business
because they will have to deal with only
one regulation instead of many.
Venky Ganesan, chairman of the
National Venture Capital Association,
told India Abroad that GST is the major
inflection point for the Indian economy.
While there will be short-term hiccups
and challenges in implementing GST, the
long-term dividends to the economy are
going to be very strong, Ganesan said.
“By collapsing a multitude of state
and local taxes into one centralized tax,
Modi is going to unleash the entrepreneurial spirit that is laden in India,” said
As a managing director of the venture
capital firm Menlo Ventures, he said he
thinks the combination of the biometric
identity card Aadhaar, the GST and the
Make in India program
together offer one of the
most interesting opportuni-
ties in the world.
Ganesan, however, was
skeptical about the ease of
doing business, despite
Modi’s statement that
reforms were being made to
do so. “India still compares
as very poor in ease of doing
business, compared to
countries such as
Singapore,” Ganesan said.
“The Indian bureaucracy
finds 100 ways to say no
instead of finding a way to
say yes.” That said, said Ganesan is
hopeful. “However, a journey of a thou-
sand miles starts with one step. Modi is
making the right steps.”
Venktesh Shukla, former TiE presi-
dent and Global TiE chairman was also in
Washington meet Modi. He told India
Abroad that while NRI fervor for Modi
remains unabated, the highlight of this
trip was Trump’s demeanor: sticking to
the script and highlighting areas of
Shukla said he expected a tumultuous
beginning for GST but was confident
things would settle down during the
next few months.
Nirvikar Singh, a professor in the economics department at the University of
California, Santa Cruz, saw GST, even
with its flaws, as a major plus for India.
“While the final design of the GST is
not optimal,” Singh said, “it will be a significant improvement on the existing tax
structure for goods and services and is…
.likely to have a positive impact on
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Prime Minister Narendra Modi poses for a group photo with U.S. business leaders
at a meeting in Washington, D.C., June 25.