Thursday March 26, 2026
14h-15h15 - CEPII, 20 avenue de Ségur, 75007 Paris
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Séminaire de recherche du CEPII : "Domestic Tax Reform, New Inputs, and Productivity: Evidence from Indian Manufacturing"
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Maxime Berrou will present "Domestic Tax Reform, New Inputs, and Productivity: Evidence from Indian Manufacturing".
Can commodity taxes distort plants’ input sourcing and production decisions? This paper investigates the impact of India’s 2017 Goods and Services Tax, which unified the domestic market by eliminating cumulative taxes on out-of-state transactions. Using a panel of manufacturing plants from 2012 to 2022, and exploiting heterogeneity in their eligibility to the reform, I employ a difference-in-differences approach to compare treated plants able to claim input taxes with untreated ones. The results show that treated plants increase input sourcing post-reform, particularly through newly acquired imported inputs. The effects are stronger in inland states, and stronger in industries with lower input tariffs. Production is also impacted, as treated plants' productivity and product scope increases relatively more, and highly-taxed plants start adjusting their product mix to become eligible to the credits. BY INVITATION ONLY Contact: conferences  cepii.fr |
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