The GST Council’s landmark decisions are an important milestone in India’s Reform Utsav. Indian industry must now build on this achievement through stronger compliance, responsible conduct and a shared commitment to trust.

India’s economic reform journey over the past twelve years has been extraordinary in its breadth, continuity and ambition. From GST and the Insolvency and Bankruptcy Code to digital public infrastructure, regulatory simplification and successive measures to improve the investment environment, reforms have progressively strengthened the foundations of the economy. Equally significant has been the transformation in the philosophy of governance, with increasing emphasis on trusting citizens and enterprises, reducing unnecessary intervention and making regulation more proportionate and predictable. The Jan Vishwas reforms of 2023 and 2026 exemplify this shift, reflecting a growing recognition that effective governance rests on clear obligations, proportionate penalties, and greater trust in legitimate economic activity.

The decisions of the 57th GST Council on 8 October 2026 represent a significant milestone in this journey. The Council’s decisions to remove arrest powers under GST, increase the monetary threshold for prosecution fivefold from Rs 1 crore to Rs 5 crore, narrow the scope of specified criminal offences and rationalise imprisonment provisions mark a fundamental change in tax enforcement. Subject to the necessary legislative amendments, these measures will help distinguish between genuine commercial disputes, procedural lapses and deliberate frauds, while retaining strong safeguards against serious tax offences.

Their importance extends beyond the immediate relief they will bring to taxpayers, particularly MSMEs and first-generation entrepreneurs. They signal greater confidence in legitimate enterprise and demonstrate how modern tax administration can combine effective revenue protection with a greater trust-based approach to compliance.

On behalf of Indian industry, I wish to convey our profound appreciation and heartfelt congratulations to Hon’ble Prime Minister Shri Narendra Modi, Hon’ble Finance Minister Smt Nirmala Sitharaman and the State Governments for this landmark achievement. Securing agreement on such sensitive questions involving enforcement powers, revenue protection and taxpayer rights required considerable political commitment and institutional confidence. The consensus achieved by the GST Council deserves special recognition as a remarkable demonstration of cooperative federalism. It is an achievement that Indian industry must acknowledge wholeheartedly, both for the reforms themselves and for the commitment and statesmanship that made them possible.

A defining moment for trust-based governance

 The significance of the GST Council’s decisions becomes even clearer when viewed against India’s wider reform journey. Over the past twelve years, successive reforms have sought not only to improve policies and procedures but also to change the relationship between Government and enterprise. The emphasis has increasingly shifted towards simplification, digitalisation, transparency and the removal of unnecessary regulatory burdens. The GST Council’s decisions take this approach further by demonstrating a willingness to recalibrate established enforcement powers and move towards a more proportionate and trust-based regulatory framework.

This transformation has been made possible in part by the growing maturity of India’s digital infrastructure. GST’s electronic returns, e-invoicing and data analytics have strengthened the capacity of tax administration to identify suspicious transactions and undertake more targeted enforcement. Greater confidence in legitimate taxpayers and effective action against deliberate evasion can therefore advance together. The objective is not weaker regulation, but more intelligent regulation, in which compliance becomes easier for honest enterprises and enforcement is concentrated where it is genuinely warranted.

There is also an important institutional lesson in the GST Council’s achievement. Much of India’s next generation of economic reforms will require cooperation between the Centre and States, particularly where regulatory responsibilities are shared across different levels of government. The Council has demonstrated that even difficult changes involving established administrative powers can be achieved through consultation, mutual confidence and consensus. Its experience offers an encouraging example of what cooperative federalism can accomplish in the larger national interest.

Industry must reciprocate the trust placed in it

 For Indian industry, this is a moment not only for appreciation but also for introspection. The Government has demonstrated its willingness to place greater trust in legitimate enterprise. Industry must respond by showing, through its own conduct, that this confidence is well founded. A more facilitative regulatory environment carries with it a corresponding responsibility to strengthen voluntary compliance, integrity, transparency and accountability.

At CII, we have been examining trust as an essential foundation of sustainable enterprise. Our publication, The Shared Responsibility of Building & Strengthening Trust, draws on the experiences of Indian corporate leaders and highlights the importance of ethical conduct, transparent communication, reliable performance and responsible leadership. One of its central messages is that trust cannot be established through declarations alone. It must be earned and sustained through consistent actions, particularly when commercial interests are under pressure or circumstances become difficult.

This principle must guide industry’s response to the present reforms. Companies should strengthen internal controls, ensure accurate and timely disclosures, honour statutory obligations and correct errors promptly. Boards and senior management must treat responsible compliance as an integral part of corporate governance. Equally important is the manner in which enterprises deal with employees, customers, suppliers and smaller businesses. Timely payments to MSMEs, fair contractual practices, transparent procurement and effective grievance redressal are all important expressions of a culture of trust. The credibility of industry’s advocacy for trust-based governance ultimately depends on the standards it demonstrates in its own operations.

Towards a Compact of Trust

 I believe the GST Council’s decisions provide an appropriate occasion for Indian industry to take this commitment further. CII would like to lead an effort to evolve a Government–Industry Compact of Trust, building on the reforms already undertaken and CII’s ongoing efforts to strengthen trust and responsible governance within the corporate sector.

Such a compact should be founded on the recognition that trust-based governance is a shared responsibility. The Government’s reform initiatives have created an important opportunity for enterprises to demonstrate higher standards of voluntary compliance, ethical conduct and accountability. Industry must take ownership of this responsibility and work towards making trust an integral part of business culture, rather than treating it simply as an expectation from Government.

CII proposes to engage its membership, corporate leaders and other stakeholders in developing this compact, with particular attention to practical commitments that enterprises can undertake and sustain. Our intention would be to build a constructive partnership that reinforces the Government’s reform philosophy, encourages responsible business conduct and helps translate greater regulatory trust into stronger compliance and better economic outcomes. The details can be evolved through consultation, drawing on CII’s existing work on trust and corporate governance.

Carrying the Reform Utsav forward

 The spirit of India’s Reform Utsav lies in the remarkable continuity of reforms under the leadership of Prime Minister Narendra Modi over the past twelve years. Each successive reform has strengthened the country’s economic foundations and created opportunities for further progress. The GST Council’s decisions represent another important achievement in this continuing journey, demonstrating that the Government remains committed to improving institutions and building greater confidence between the State and enterprise.

Indian industry has both an opportunity and a responsibility to support this endeavour. CII would be privileged to work with the Government in taking the message of the Reform Utsav more widely across the country, explaining the significance and benefits of the reforms, supporting their effective adoption and encouraging enterprises, particularly MSMEs, to strengthen compliance and responsible business practices. Our national and State-level networks provide an important platform for this engagement.

The GST Council has shown what can be achieved through enlightened leadership, sustained reform commitment and cooperative federalism. Its landmark decisions deserve the wholehearted appreciation of Indian industry. The most meaningful expression of that appreciation will be our willingness to play our part in strengthening the culture of trust that these reforms seek to establish.

As India advances towards Viksit Bharat 2047, Government and industry must continue to work in tandem, reinforcing each other’s commitment to integrity, efficiency and national development. CII stands ready to contribute to this journey, helping carry forward the Reform Utsav and working towards a Compact of Trust that can give lasting expression to the spirit of these landmark reforms.