In the third quarter, Indian markets continued on an upward trajectory, registering a 4.6% gain for the quarter and a 6.1% gain on a YTD basis.
The major news for the broader Indian economy during the quarter was the passing of the long-heralded Goods and Savings Tax (GST). This levy creates for the first time a unified market for manufacturing in India. Whilst services accounts for 50% to 55% of GDP across India, manufacturing has long been held back by local-level taxes. Manufacturing, which makes up 20% to 25% of Indian economy, stands to benefit the most from the implementation of the GST. It should gradually increase market share from the country’s vast unorganized economy. This will result in higher tax revenues for the government and higher GDP
With 15 states already having ratified the bill in their respective assemblies, the path is clear for the next step of forming the GST Council to determine the rates. Although the market has run up sharply over the last few months, the outlook remains positive and any correction should be looked at as an opportunity to invest.