Join WhatsApp Channel
India’s next phase of GST reform could significantly change the economics of doing business from India for companies in the United States and the UAE.
The changes expected in the next phase of GST reform go beyond routine tax simplification. They seek to align India’s export rules with how global businesses actually operate—through overseas branches, contract manufacturing, testing, engineering, technology, analytics, R&D and global back-office centers.
For US and UAE businesses using India as a delivery or supply-chain hub, this could be particularly significant.
Services: making India more competitive
One of the most important areas of expected change concerns export of services. The framework is expected to recognize a wider range of commercial arrangements where services are performed in India for an overseas customer.
For example, testing, certification, repair, calibration, R&D and analysis carried out in India on goods or prototypes belonging to a foreign customer could qualify as exports, even though the physical work is performed in India.
The implications could extend to data analytics, engineering and design services, medical transcription and diagnostic support, technology services and global back-office operations.
This is highly relevant for US companies looking at India for technology, professional and knowledge-intensive functions, as well as UAE-based businesses building India-linked GCC and shared-service operations.
The underlying objective is straightforward: Indian GST should not become a cost embedded in the price of services exported to the world.
A boost for global supply chains
The expected changes relating to contract manufacturing and job work for foreign principals could be equally important.
A foreign company may send raw materials or semi-finished goods to an Indian manufacturer for processing, assembly, testing or other activities. The expected framework could provide export treatment based on the location of the overseas customer, even where the finished goods remain in India or are subsequently supplied as directed by the foreign principal.
For US and UAE companies diversifying their supply chains, this could make India more attractive as a manufacturing, processing and engineering base.
The potential impact is particularly relevant to sectors such as electronics, semiconductors, pharmaceuticals and chemicals.
Overseas branches should no longer be a barrier
Another significant area of expected change concerns Indian businesses operating through their own overseas branches.
The revised approach is expected to ensure that the mere use of an overseas branch does not automatically defeat export treatment. This could materially benefit Indian IT companies, consultants, engineering firms, professional practices and other service providers serving US and UAE clients through international structures.
Why this matters to US and UAE businesses
For global businesses, the message would be bigger than GST.
India appears to be moving towards a framework where its tax system better supports cross-border service delivery, global manufacturing and integrated supply chains.
For US and UAE companies, these expected changes could strengthen the case for India as a strategic extension of their operations—not merely as a low-cost destination, but as a technology, engineering, manufacturing, R&D and global services hub.
If these changes materialize in the expected form, the next GST reforms could do more than simplify compliance. They could make “Made in India” and “Delivered from India” significantly more competitive in global markets.
Disclaimer: The opinions and views expressed in this article/column are those of the author(s) and do not necessarily reflect the views or positions of South Asian Herald.
