India's leap toward $20 trillion economy: Equirus pitches Railways listing, tax and capital-market reforms

India could become a $20 trillion economy by 2036 if it can raise underlying rupee growth to around 14.2% and sustain annual rupee appreciation of 3-3.6%, according to a research report by Equirus that proposes a sweeping 20-step reform agenda spanning infrastructure, taxation, capital markets, human capital and services.

The report estimates that India’s economy, currently at around $3.7 trillion, would need to grow roughly 5.5 times to reach the target, implying sustained nominal growth of about 18% in dollar terms, compared with the historical trend of 10-11%. Equirus said the challenge is not only “how fast” India grows, but “how” it grows.

The recommendations include some major structural reform proposals — from taking the Railways public and creating a sovereign wealth fund to cutting TDS, bringing fuel under GST, reviving private-sector R&D and removing the double taxation of equity transactions.

Equirus pitches listing Indian Railways

One of the most striking proposals is to “Take the Railways public”, with Equirus arguing that listing Indian Railways could fundamentally alter the way its massive capital expenditure is financed.

The report estimates that Railways represents an annual capital commitment of about ₹2.8 lakh crore in FY27, equivalent to nearly 5% of the Union Budget, with most of it currently funded by taxpayers. Equirus estimates that a public listing at around three times revenue could value the Railways at about $500 billion.

The brokerage argues that once capital markets begin funding railway investment, around ₹2.8 lakh crore a year could be freed from the Union Budget for other priorities. It also expects such a listing to attract foreign capital and support the rupee.

The proposal is distinct from the existing listed railway companies such as IRCTC and IRFC. Equirus is talking about bringing the Railways itself to the public markets as a much larger asset-backed entity.

₹13 lakh crore working capital unlock through TDS cut

Equirus has also targeted India's tax-withholding framework, proposing a flat 5% TDS on investment income, with the final tax liability settled when investors file their returns.

The report estimates that the move could release around ₹13.4 lakh crore of working capital back into the economy. It argues that the existing system, under which 10-20% can be withheld upfront and refunds can take 12-18 months, effectively locks up investor capital.

The report also proposes abolishing advance tax, arguing that the measure would improve cash flows without permanently eliminating the tax liability because the amount would ultimately be settled at filing.

Fuel under GST, state capex floors

Another major proposal is to bring fuel under the GST regime. Equirus estimates that putting fuel under an 18% GST rate could reduce the price of a typical ₹97 litre of fuel to around ₹78, while allowing businesses to claim input-tax credit. The move could free around ₹5.5 lakh crore across the economy, reduce logistics costs and add 0.3-0.4 percentage points to annual growth, although the government could lose about ₹1.6 lakh crore a year in net central excise revenue.

The brokerage also wants mandatory state capital expenditure floors. States budgeted about ₹10.26 lakh crore of capital spending in FY26 but used only 77%, leaving roughly ₹2.3 lakh crore unspent. Equirus estimates that closing this utilisation gap could add around ₹5.2 lakh crore to GDP without additional borrowing.

Sovereign fund, deeper bond market and lower transaction taxes

Equirus proposes pooling around $249 billion of PSU equity into an India Sovereign Fund modelled on large global state investment companies. The fund could generate annual proceeds while reducing the government's reliance on budgetary resources.

The report also calls for bond-equity tax parity, arguing that India's corporate bond market is only around 18% of GDP compared with 130% for equity. Aligning tax treatment could add around ₹54 lakh crore of bond-market capacity, while reducing borrowing costs by an estimated ₹2.2 lakh crore a year.

Another proposal is to “End the double transaction tax” by removing stamp duty on financial products and STT on cash equity, while retaining STT on derivatives as an integrity measure.

GCCs, tourism seen as services engines

Equirus expects services to become the biggest engine of India's expansion, with its share of GDP rising from 54% to more than 65% and output increasing from around $2 trillion to more than $11 trillion.

The report proposes a National GCC Policy to increase India's 1,800-plus GCCs to 5,000. That, it estimates, could generate $470-600 billion of economic impact and 20-25 million jobs.

It also wants tourism promotion spending raised sixfold to ₹15,000 crore, potentially generating an additional $21 billion a year in foreign exchange, according to the report.

Reform package could generate ₹4.5 lakh crore net gain

Equirus estimates the entire package would involve around ₹3.4 lakh crore of annual direct costs against ₹7.9 lakh crore of gains, resulting in a net annual gain of roughly ₹4.5 lakh crore, or a 2.3x return. The biggest gains include ₹2.95 lakh crore from additional tax revenue generated by higher growth, ₹2.8 lakh crore from railway capex freed from the Budget, ₹1.3 lakh crore from the sovereign fund and ₹86,000 crore in government interest savings from deeper bond markets.

Equirus said the reforms would need to work together, with faster rupee growth and currency appreciation reinforcing each other. Under its estimates, 14.2% rupee growth combined with 3.6% annual appreciation gets India to the $20 trillion target.