Jamshyd Godrej, the chairman and managing director of the Rs 16,000-crore Godrej Enterprises Group, believes GST rate rationalisation is not enough to nudge the companies to invest in augmenting capacity, and that the economy needs big bang reforms of the 90s type, again.
Godrej said the government needs to usher in serious deregulation to push demand up and attract investments and he believes there are several avenues for that so that there is better ease of doing business.
“Nobody is going to invest unless the demand is clear,” Godrej told reporters here Tuesday when asked why private capex is still the biggest missing cog in the growth wheel.
“Private firms will increase capital expenditure only if the demand is clear and more needs to be done beyond the recent rationalisation of goods and services tax (GST) rates in order to ensure ease of doing business,” he explained while talking to reporters announcing a rebranding of the group entity Godrej Interio under which the second largest revenue head of the group plans to increase revenue and market share in the near-term. It plans to nearly treble the revenue from around Rs 3,500 crore in FY25 to Rs 10,000 crore by 2029.
To achieve this annual growth of 25% over the next three-four fiscal, the company also announced a 50% increase in store opening in the next three years to 1,500 stores of which 300 will be in the business to consumer segment and 200 in the business to business vertical. The company will also invest Rs 300 crore for this expansion which also includes extending the reach of the online presence and product development.
On GST rate cuts, Godrej said, this was only rationalisation of the rates, which anyway was long overdue as the initial rollout had too many rates. But this will not lead to more consumption and thus in private capex, he said.
Explaining his views further, he said: “What we need is a real growth imperative. It is not only GST, but there is a whole host of deregulation that has to happen, like ease of doing business. There are so many areas the government can work on. The big bang reforms are many decades old now. So, we need more big bang reforms constantly. Only that will ensure more capex and investment," Godrej said.
When asked about specific reforms pertaining to his industry, he said "significant" deregulation in every area should be pursued by the government.
To a question on why even the salaried class is not spending despite the major income tax relief, he said most of those benefits may have been used to repay debt, rather than drive consumption, thus casting doubt on the effectiveness of the income tax cuts announced earlier this year to push up consumption.
"Growth drivers are not these little sops. For example, due to the tariff problems now, the government is talking about improving export incentives and competitiveness. Look at our market share in global trade and our exports. If we can double that, then see the growth rate. There are enough and more avenues available if we want to do it," Godrej said.