Three years after he was elected to boost India’s economy, Prime Minister Narendra Modi has delivered his most significant economic reform to date. A nationwide goods and services tax that kicked in July 1 is replacing more than a dozen state and central levies, and promises to knit 1.3 billion people in India’s 29 states and seven federally administered union territories into a single market.

With its finely tuned gift for hyperbole, the Modi government turned the occasion into a spectacle. On Friday, lawmakers and eminent...