GST 2.0 and beyond: Can India seize the repositioning moment?

Globalisation’s golden age is over; the world is redrawing its economic map. The U.S. is reviving industrial policy, China is turning inward, Europe is betting on green rules, and emerging powers are racing to fill the gaps. India, too, is recalibrating—pushing GST 2.0 reforms, negotiating trade deals, and positioning itself as a trusted supply hub.

Yet challenges remain—petroleum, stamp duty, and electricity duty lie outside GST, and execution risks loom large. Policy agility will determine whether India becomes a key node in the new global order or misses the opportunity. The question is simple: who will adapt, and who will be left behind? Nations that embrace reform, resilience, and foresight will shape the future.

We stand at a rare historical juncture. The old certainties of globalisation are gone, but the new order is not yet born. The United States is reinventing industrial policy, China is hedging against isolation, Europe is betting on green standards, and emerging economies are jockeying for new roles. The global economy is no longer defined by one dominant centre but by many competing hubs of power and production.

Repositioning, therefore, is not a temporary adjustment—it is the defining economic project of our times. Nations that adapt with foresight, invest in technology and skills, and balance national interest with global cooperation will emerge stronger. Those that cling to outdated models’ risk being marginalised in the new economic cartography.

The key question is not whether nations are repositioning, but whether they are making the right choices. The world has been in flux ever since Donald Trump launched his “America First” campaign of tariffs and bullying diplomacy against India, China, Japan, Russia and others. That moment marked the beginning of a tectonic shift.

For nearly three decades after the Cold War, globalisation produced a unipolar economic model. Supply chains stretched across continents, with China as the factory floor, America as the consumer of last resort, and Europe as the regulator-in-chief. Capital, goods and people moved more freely than ever before. Growth was fuelled by efficiency and specialisation.

But this golden age of globalisation was also fragile. The pandemic exposed the dangers of overdependence on far-flung supply chains. The Ukraine war weaponised energy and food trade, turning pipelines and grain shipments into instruments of coercion. And U.S.–China rivalry has moved well beyond tariffs into a battle for technological supremacy. Restrictions on semiconductors, artificial intelligence, and 5G are now the frontlines of the new Cold War.

The result is fragmentation. Nations from Vietnam to Mexico, from India to Indonesia, are seeking to position themselves as alternative hubs of supply and production. In this scramble, geopolitics and economics are intertwined. Friend-shoring, de-risking, selective protectionism—once taboo words—have now become central to the vocabulary of global trade.

The United States is retreating its industrial policy. Washington is offering billions in subsidies for semiconductors and green energy, even as it presses allies to limit exposure to China. “Globalisation” is giving way to “strategic globalisation”—a web of trusted partnerships rather than universal integration.

India has been carefully recalibrating its own strategy. Though Trump has stated India and China and Russia have drifted from US and have gone closer to China and felt that this friendship may last long, the Commerce Minister Piyush Goyal expressed optimism saying that a bilateral trade agreement with US is not ruled out.

He said, with five rounds completed since March a deal is expected by November. If concluded, it would mark a significant step in India’s repositioning—balancing protection of domestic interests with integration into new supply networks.

China, meanwhile, is engaged in its most profound economic shift in decades. For forty years, its model was simple: attract foreign capital, manufacture for the world, and reinvest surpluses in infrastructure. That engine is slowing.

Rising wages, demographic decline, and geopolitical pushback are forcing Beijing to pivot. President Xi Jinping’s call for “dual circulation”—reducing reliance on exports while strengthening domestic consumption and indigenous innovation—is emblematic of this transition. The question is whether China can transform its growth model quickly enough to avoid stagnation.

The geopolitical dimension of repositioning was also visible at the recent Shanghai Cooperation Organisation (SCO) summit. Prime Minister Narendra Modi received a notably warm welcome, and India’s call for stronger action against cross-border terrorism found resonance. Pakistan, in contrast, was left isolated, symbolically ignored as Putin and Modi walked past Prime Minister Shehbaz Sharif without acknowledgement.

While tensions remain after the Galwan clash of 2020, there are signs that India and China are compartmentalising their relationship, treating each partnership independently rather than linking all issues together. As Modi rightly argued, relations with one country should not be hostage to ties with another.

At home, India is undertaking reforms to make repositioning more credible. The GST Council’s decision to move towards “GST 2.0” with significant rate cuts marks the boldest tax reform in decades. The much-demanded two-slab structure is a step closer to the vision of “one nation, one tax.” For years, critics lambasted GST as overly complex. The latest changes suggest a willingness to listen, adapt, and simplify.

Predictably, the opposition has claimed that the Modi government is merely implementing systems first conceived under UPA. But the truth is that the UPA, despite its celebrated “Harvard-educated” ministers, failed to build consensus. Delivery matters more than design. What counts is not who thought of a reform but who implemented it effectively.

Still, challenges remain. Petroleum, stamp duty and electricity duty continue to lie outside the GST framework, causing inefficiencies and high costs. Bringing them within the ambit of GST would not only simplify compliance but also provide genuine relief to consumers. Equally, GST must remain dynamic, with periodic reforms to account for new products, digital services, and shifting consumption patterns.

The success of GST 2.0 will ultimately depend on execution. Lower tax rates must translate into lower prices. If businesses pocket the benefits instead of passing them on to consumers, the reform will lose credibility. The coming festive season will be the real test. A revival in demand and discretionary spending would suggest that the reform is working; failure to stimulate consumption would expose its limits.

There is, however, reason for optimism. The decision to treat large televisions and air-conditioners not as luxury goods but as necessities reflects a changing mindset within India’s bureaucracy—one that is more attuned to consumer realities and growth needs. If this spirit of pragmatism continues, India could reap the twin benefits of stronger domestic demand and improved competitiveness.

Ultimately, the larger lesson is clear. Economic repositioning is not optional. It is the condition of survival in a fractured world order. The pandemic, the Ukraine war, and the U.S.–China tech battle have shown that efficiency alone cannot guarantee resilience. Nations must balance integration with self-reliance, competition with cooperation, and reform with inclusivity.

India’s trajectory will depend on whether it can marry external repositioning with internal reform. Negotiating trade deals, attracting supply chains, and building diplomatic partnerships are essential. But so too is ensuring that domestic reforms—whether tax simplification, skill development, or ease of doing business—create a competitive and resilient foundation.

(The author is former Chief Editor of The Hans India)