A core recommendation of the Equirus framework focuses on incorporating petroleum products into the unified Goods and Services Tax (GST) structure at an estimated 18% standard rate.
Currently, non-integrated fuel levies inflate freight overheads. Equirus projects that integrating fuel into the GST chain would unlock approximately ₹5.5 lakh crore in capital liquidity across supply chains. This structural transition could reduce national logistics costs from roughly 9% down to 7% of non-services GDP, potentially adding 0.3 to 0.4 percentage points to annual GDP growth and yielding up to $60 billion in incremental export gains. However, analysts note the reform would require fiscal adjustments to offset an estimated net central excise revenue gap of nearly ₹1.6 lakh crore annually.
Capital Market Parity and Corporate Bond Expansion
The report highlights a structural imbalance in India’s financial architecture, noting that the domestic corporate bond market stands at approximately 18% of GDP, compared to 130% for equity market capitalization.
To correct this asymmetry, Equirus advocates aligning the tax treatment of debt securities closer to equity instruments. According to economic modeling within the report, expanding India’s bond market depth toward benchmark peer levels—such as China’s—could generate approximately ₹54 lakh crore in additional institutional financing capacity.
Furthermore, lowering average corporate borrowing costs through deeper credit markets could deliver direct interest savings of nearly ₹2.2 lakh crore annually (0.63% of GDP), creating an economic multiplier effect capable of boosting baseline growth by an additional 0.9 to 1.3 percentage points.
Withholding Tax Streamlining
To optimize liquidity for retail and institutional investors, the brokerage proposes simplifying Tax Deducted at Source (TDS) rates on investment income to a standardized 5% flat rate, with residual tax obligations settled during annual income tax returns.
Equirus estimates that streamlining withholding mechanisms would prevent unnecessary capital lock-ups, releasing approximately ₹13.4 lakh crore of working capital directly back into secondary market operations and economic circulation.
