Auto sector welcomes GST rate cut, urges Centre to focus on electric vehicles

Leading industry voices shared their views on how the move will impact consumers and businesses.

Anish Shah, Group CEO & MD, Mahindra Group welcomed the decision and said, "The next-generation GST reforms announced today mark a defining moment in India's journey towards building a simpler, fairer, and more inclusive tax system. By moving to a streamlined two-rate structure and focusing on essentials that touch the lives of every citizen, the Government has reaffirmed its commitment to Ease of Living and Ease of Doing Business. These measures will not only provide immediate relief to households but also strengthen key sectors such as automobiles, agriculture, healthcare, renewable energy, and MSMEs."

Industry body SIAM hailed the decision to reduce GST on vehicles to 18 per cent and 40 per cent, from earlier rates of 28 to 31 per cent and 43 to 50 per cent.

Shailesh Chandra, President, SIAM, said the decision will significantly benefit first-time buyers and also give a boost to the Industry.

"The Automobile Industry welcomes the Government's decision to reduce the GST on vehicles. This timely move is set to bring renewed cheer to consumers and inject fresh momentum into the Indian Automotive sector. Making vehicles more affordable, particularly in the entry-level segment, will significantly benefit first-time buyers and middle-income families. We also thank the Government for continuing with GST rate of 5 per cent on Electric Vehicles, which will help sustain the ongoing momentum towards sustainable mobility."

C S Vigneshwar, President, FADA, said, "The 56th GST Council meeting marks a watershed moment for India's automobile retail industry. FADA warmly welcomes the bold and progressive reforms which simplify the tax structure, lower rates for mass mobility, and bring consensus across all States".

He also added, "This is a decisive step that will boost affordability, spur demand, and make India's mobility ecosystem stronger and more inclusive. One area that may need the earliest clarification is about levy and treatment of cess balances currently lying in dealers' books, so that there is no ambiguity during transition".

Various automobile manufacturers have urged the government to keep the electric vehicle sector in sharp focus, as it will give a new boost to the industry.

Ajinkya Firodia, Vice Chairman, Kinetic India, noted the GST rate rationalisation for the auto sector will boost the economy, but urged the government to keep focus on the electric vehicle (EVs) industry.

"We welcome this very positive and timely move by the Government. The GST rate cut will give a strong boost to the economy in an unprecedented manner. Our only humble request is that the electric vehicle sector continues to be kept in special focus. To ensure higher penetration of EVs, especially two-wheelers, we urge the continuation of supportive schemes," said Firodia.

Rajesh Jejurikar, ED & CEO - Auto and Farm Sector, M&M, said the move to cut GST rates on tractors will boost affordability for farmers.

"We applaud the Government for this landmark GST rationalisation, which will have a far-reaching positive impact across the automotive and farming sectors. The move makes tractors and farm machinery more affordable for farmers, reduces costs for commercial vehicles and improves accessibility for personal mobility through rationalisation of rates across all SUVs," said Jejurikar.

Luxury carmaker Audi India also welcomed the move, saying GST simplification aligns with India's economic vision and supports ease of doing business.

Balbir Singh Dhillon, Head, Audi India, noted, "We view the GST simplification as a step in the right direction, one that supports industry growth and helps us expand the market. The GST Council's move to retain a low rate for EVs is a welcome step; this brings much-needed clarity and makes our portfolio more accessible to our discerning buyers."

Various other experts say that the rationalisation of GST rates will provide a significant boost to consumption during the festive season and accelerate India's journey towards cleaner and more affordable mobility. (ANI)