Sep 4: GST 2.0 delivered, Deep Tech Alliance, Google's Big Win

In an irony not to be missed, Leaders Xi, Putin, and Kim were caught in a rare hot mic moment talking about living to 150 in the middle of a massive military parade. The conversation, which could have passed for an anti-aging podcast if the participants weren’t actual nuclear power leaders, consisted of the top dudes talking about organ transplants and biotech keeping people young forever. While it’s good to know awkward small talk is universal we’re not exactly sure how we feel about a 150 year old Kim Jong Un.

Now, let’s get into the Dispatch! 🚀

Today’s reading time is 6 mins.

Sensex and Nifty climbed on investor optimism about a possible GST rate cut that could boost domestic consumption.

Council Meeting & High Expectations: The 56th meeting of the GST Council opened today in Delhi with high expectations that long-awaited reforms may finally take shape. Consumers and businesses watched closely as the Council rationalized the current four-tier GST structure into just two slabs of 5 and 18 per cent, along with a special 40 per cent rate for luxury and demerit goods. The proposal, backed by Prime Minister Modi in his Independence Day address and shaped by a Group of Ministers, sharply reduced the cost of household essentials, bring down prices of premium goods, and potentially give a festive-season boost to the economy.

What Gets Cheaper: According to the Centre’s plan, almost all items currently taxed at 12 per cent would fall to 5 per cent, while a large majority of goods in the 28 per cent bracket would move to 18 per cent. That means cheaper staples like ghee, nuts, medicines and even bicycles, as well as a price cut for appliances such as refrigerators and televisions. Automobiles may see a split structure: entry-level cars at 18 per cent, while luxury vehicles and SUVs would fall under the new 40 per cent bracket. Tobacco, cigarettes and pan masala too will attract the highest rate. The Centre is also pushing for electric vehicles to be taxed at just 5 per cent, clashing with a ministerial panel’s suggestion of 18 per cent for EVs priced up to ₹40 lakh.

Pushback and Cess Debate: The reforms, however, faced resistance from opposition-ruled states worried about revenue losses. Eight states have demanded a clear compensation mechanism, while the Centre insists that lower rates will boost consumption and offset losses over time. The issue of the compensation cess, which was extended until 2026, will also come up, with discussions on possibly ending it earlier to repay Covid-era loans.

GST 2.0: Who Really Wins? The 56th GST Council meeting has triggered fresh debate on who truly stands to gain from GST 2.0 - the middle class at the checkout counter or India Inc. in the boardroom. The government’s simplification of the four-tier system into two slabs, has raised hopes of lighter bills for households. But not all benefits may reach consumers immediately, as companies might retain part of the margin. For businesses, however, the reform is about more than repricing. It offers room to rework strategies, widen margins, and expand into smaller packs and rural markets. FMCG and textile firms look set to be immediate winners, while autos and electronics remain weighed down by compensation cess. The bigger question is fiscal: trimming slabs risks revenue gaps, leaving states uneasy. For now, GST 2.0 promises relief for households and opportunity for companies but the balance between consumer cheer and corporate bonus remains the real puzzle. 

Big Ticket Investment: Eight venture capital and private equity firms from the US and India are coming together to back India’s deep tech ambitions. The newly formed India Deep Tech Investment Alliance is set to channel more than $1 billion into Indian startups over the next decade, a move that could reshape the country’s innovation arena.

Who’s In The Club? The founding members of the alliance include a heavyweight mix of global and Indian names: Celesta Capital, Accel, Blume Ventures, Gaja Capital, Ideaspring Capital, Premji Invest, Tenacity Ventures, and Venture Catalysts. Each firm has pledged long-term private capital, ranging from seed to Series B rounds, with no appetite for late-stage investments. Alongside funding, the alliance will offer mentorship, industry access, and networking opportunities, while also supporting startups as they scale within India and eventually expand overseas.

Why It Matters: The timing is significant. Earlier this year, the Indian government approved a ₹1 lakh crore ($11 billion) Research, Development, and Innovation (RDI) scheme to accelerate deep tech R&D. Under the RDI framework, alliance members must invest in “sunrise sectors,” ensure startups are domiciled in India, and secure regulatory approvals. This kind of formal grouping is unusual in the venture world, where firms typically compete or co-invest informally.

Complications On The Horizon: Still, the alliance unfolds against a backdrop of geopolitical friction. In February, Donald Trump and Narendra Modi unveiled the TRUST initiative (Transforming the Relationship Utilising Strategic Technology) to strengthen bilateral tech ties. Yet, relations quickly soured when Trump slapped a 50% tariff on Indian goods, citing New Delhi’s continued oil trade with Russia. Analysts warn such flashpoints could complicate otherwise ambitious tech collaborations.

The Bottom Line: For India’s deep tech founders, this alliance offers both capital and credibility, two essentials for scaling globally competitive ventures. But whether this translates into lasting impact may depend as much on political will in Washington and New Delhi as it does on the promise of India’s startup ecosystem. 

Jane Street vs SEBI: US trading firm Jane Street has appealed to the Securities Appellate Tribunal against an interim order by SEBI, alleging the regulator withheld crucial documents needed for its defence. The firm has paid the ₹4,843 crore (~$567 million) penalty but has stopped local trading and wants the tribunal to compel SEBI to disclose all relevant materials.

Indian Firms' Rural Push: Indian companies are focusing on small-town and village markets to counter the new 50% US tariffs. According to NielsenIQ, rural consumption has grown faster than urban for six consecutive quarters. Firms like Britannia and Pidilite are reporting strong Q1 growth by expanding their distribution networks into smaller towns, while GST tax cuts are expected to boost household demand further.

EV Tax Surge: An Indian tax panel has proposed a significant increase in GST on luxury electric vehicles, a move that could affect automakers like Tesla, BMW, and Mercedes-Benz. The panel recommends raising the tax to 18% for EVs priced between $23,000 and $46,000, and to 28% for those above $46,000.

Renewables Push: India is poised to add a record 39-43 GW of renewable energy capacity in 2025, with 30 GW already added and 22 GW from solar and wind in the first half of the year. Minister Pralhad Joshi stated this brings the total to 226 GW, with an additional 186.3 GW under implementation and 67.08 GW tendered, nearing the 500 GW target for 2030.