How Will the GST Overhaul Benefit the Indian Automotive Sector?
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Synopsis
Discover how recent GST reforms are set to revolutionize the Indian automotive industry, driving economic growth and consumer confidence while making vehicles more affordable. This article delves into insights from industry leaders on the implications of these changes.
Key Takeaways
- GST reforms reduce tax burdens significantly.
- Small cars now attract only 18% GST.
- Electric vehicles benefit from low tax rates.
- Industry leaders support the changes.
- Alignment with Make in India initiative.
New Delhi, Sep 4 (NationPress) The transformative Goods and Services Tax (GST) reforms introduced by the government are set to significantly boost India's economy, bolster consumer trust, and directly impact the automotive industry, according to industry experts on Thursday.
Unsoo Kim, Managing Director of Hyundai Motor India, stated that these reforms will serve as a crucial growth catalyst.
“This groundbreaking initiative will provide a substantial boost to the Indian economy, increasing consumer confidence and overall market vitality. By easing the tax burden on essential items, the government is paving the way for inclusive development and a thriving, consumption-driven economy,” he remarked.
Kim further mentioned that the GST modifications would greatly benefit the automotive sector. “Importantly, 60 percent of our Internal Combustion Engine (ICE) range will now be categorized under the 18 percent tax bracket, while the rest will fall under 40 percent.”
“These adjustments are in perfect alignment with the Government’s vision for a Viksit Bharat and the Make in India initiative, fostering local manufacturing and stimulating demand in both urban and rural areas,” he added.
Balbir Singh Dhillon, Head of Audi India, also expressed his support for the reform. “We perceive the GST simplification as a positive move that promotes industry expansion and allows us to grow our market presence.”
“The GST Council's decision to maintain a low rate for electric vehicles (EVs) is encouraging; it provides essential clarity and enhances the accessibility of our offerings to discerning customers,” he stated, noting that the new framework improves transparency and strengthens long-term planning.
Previously, the GST Council revealed comprehensive changes to India's indirect tax system, decreasing the slabs from four to two—5 percent and 18 percent—with luxury items like large SUVs now taxed at 40 percent.
Starting September 22, small cars and two-wheelers will incur only an 18 percent GST, reduced from the current 29–31 percent, while larger vehicles will be subject to 40 percent GST, down from the previous 43–50 percent range.
Motorcycles under 350 cc will also see a price reduction as GST falls from 28 percent to 18 percent.
Point of View
I view the recent GST reforms as a pivotal moment for India's economy. This overhaul not only aims to simplify taxation but also to foster growth in the automotive sector, which is crucial for overall economic stability and consumer confidence. The alignment with initiatives like Viksit Bharat and Make in India demonstrates a strategic approach to encourage local manufacturing and boost demand.
NationPress
04/09/2025
Frequently Asked Questions
What are the key changes in GST for the automotive sector?
The GST reforms have reduced the tax slabs from four to two, with small cars and two-wheelers now facing an 18 percent GST, while larger vehicles will incur 40 percent. This change aims to lower costs for consumers.
How will the GST reforms affect electric vehicles?
The GST Council has retained a low tax rate for electric vehicles, enhancing their accessibility and promoting their adoption among consumers.
When will these GST changes take effect?
The new GST rates for small cars and two-wheelers will come into effect on September 22.
What is the expected impact of these reforms on consumer confidence?
Industry leaders believe that these reforms will bolster consumer confidence by lowering the tax burden on essential goods and making vehicles more affordable.
How do these reforms align with government initiatives?
The GST changes align with the Government's vision of Viksit Bharat and the Make in India initiative, promoting local manufacturing and boosting demand.
