Enhance buoyancy & strength confidence: India's auto sector reacts to new GST rates

Unsoo Kim, Managing Director – Hyundai Motor India“We at Hyundai Motor India Limited (HMIL) welcome the landmark GST reforms announced by the Government of India. This revolutionary step will provide a strong impetus to the Indian economy, enhance buoyancy and further strengthen consumer confidence. By reducing the tax burden on essential goods, the Government has laid the foundation for inclusive growth and a robust, consumption-led economy. The GST overhaul will directly benefit the automotive sector. The announced reforms align seamlessly with the Government’s commitment to Viksit Bharat and the Make in India initiative, encouraging domestic manufacturing and boosting demand across both urban and rural markets. Notably, 60% of our ICE portfolio will now fall under the 18% slab rate, with the remainder at 40%. HMIL remains committed to supporting the Government of India’s vision and contributing meaningfully to the nation’s journey toward becoming a global manufacturing powerhouse.” Also Read : GST 2.0 slaps a 40% tax on these cars, dubs them as luxury ones Santosh Iyer, Managing Director & CEO, Mercedes-Benz India“The government listened to the automotive industry’s long-standing wish list of rationalising GST rates. This GST revision is a step in the right direction, is progressive and will induce the much-needed impetus by boosting consumption and bringing momentum to the automotive industry, which essentially remains the pulse of the Indian economy. We are thankful to the Government for keeping the GST rate for BEVs unchanged, ensuring faster transition to a decarbonised future.” Shailesh Chandra, Managing Director – Tata Motors Passenger Vehicles & Tata Passenger Electric Mobility“These reforms reflect Prime Minister Narendra Modi’s vision for next-generation GST that prioritises both ease of living and ease of doing business. The streamlined GST framework goes beyond rate rationalisation with structural reforms enhancing long-term confidence in India’s economic environment. The GST Council’s decision to retain the 5% GST rate on electric vehicles is a forward-looking move that reinforces India’s commitment to sustainable, zero-emission mobility and signals long-term policy stability. The reduction of GST on small cars to 18% further expands access to personal mobility, making it more affordable for a broader section of society. Together, these measures will not only accelerate EV adoption but also drive innovation, strengthen domestic manufacturing, and propel India toward a cleaner, smarter, and self-reliant mobility future.” Rajesh Jejurikar, ED & CEO – Auto and Farm Sector, Mahindra & Mahindra“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. Together, these measures are expected to stimulate demand and drive inclusive growth across the entire ecosystem. We also appreciate the continuation of the 5% GST rate on EVs, which is a critical enabler of India’s clean mobility vision. This measure will further accelerate the adoption of electric vehicles and reinforce India’s leadership in sustainable, green transportation.” Venkatram Mamillapalle, Managing Director, Renault India“We welcome the GST Council’s decision to rationalise rates into a two-slab structure of 5% and 18%, a landmark reform for the Indian economy. This is indeed an early festive gift from the Government, lifting consumer sentiment, easing household expenses, and strengthening confidence in long-term growth. For the automobile sector, the move is transformative. The GST reduction on the entry-level car segment (petrol below 1200 cc and diesel below 1500 cc) from 28% to 18%, and a uniform rate for auto components at 18%, make personal mobility significantly more affordable for the masses. The rationalised GST will ease household expenses, fuel consumption, and create a multiplier effect on long-term economic growth. With reduced taxes on tractors, agri-inputs and farm equipment, the GST reform will boost rural demand, strengthen agri-linked enterprises, and create new growth avenues in semi-urban and rural India. This will unlock fresh demand in Tier 2, Tier 3, and rural markets where improving farm incomes are driving aspirations for car ownership. Renault is well positioned to leverage this shift, and we believe the reform will accelerate rural and urban demand alike, boost manufacturing, and contribute strongly to India’s economic momentum.” Sudarshan Venu, Chairman – TVS Motor Company”We applaud the government for taking consistent steps towards boosting growth and enhancing the growing middle class’s spending power – all towards realising PM’s vision of Viksit Bharat 2047. The GST tax cuts are a major move by the government to further turbocharge growth. It will significantly boost consumption across segments of society. For our industry especially, it’s a welcome move as it will help 2Ws become more accessible and also help those looking to upgrade.” Swapnesh R Maru, Deputy Managing Director – Toyota Kirloskar Motor “We thank and congratulate the Government for the landmark second generation GST reform, a significant step towards accelerating India’s journey to a stronger and more resilient economy. Beyond empowering the common man, this reform is poised to enhance market confidence, strengthen consumer sentiment and stimulate investments — collectively broadening prosperity across the nation. The relief extended to smaller vehicles, along with the rationalization of levies on larger ones, will enhance mobility for the common man by making it more accessible and affordable, while at the same time stimulating growth across the automotive sector. As a next step , it is essential to reduce fossil fuel imports and achieve our stated national objectives of energy self-reliance, promotion of bio-fuels and decarbonisation. Given India’s rapid economic growth that is bound to increase the demand for energy, particularly fossil fuel consumption by transportation sector, it is crucial that all cleaner and greener technologies are also promoted and incentivised through suitable policy measures, including taxation so that these are preferred by consumers over the conventional petrol and diesel vehicles.” Jyoti Malhotra, Managing Director – Volvo Car India“Volvo Car India welcomes the government’s decision to rationalise GST ahead of the festive season, considering it a timely and commendable step that is expected to provide a much-needed boost to consumer sentiment and support overall economic activity. In the electric vehicle segment, the continuation of the standard 5% GST reinforces the government’s sustained commitment to advancing electrification and promoting sustainable mobility. The removal of the compensation CESS on passenger vehicles is also a progressive measure that will contribute to greater standardisation and stimulate demand across the industry. However, we believe that a uniform tax framework for all internal combustion engine (ICE) vehicles would further encourage innovation, technological advancement, and higher safety standards. The company remains optimistic that this consideration will be addressed in the medium term to broaden access and meet the rising aspirations of Indian consumers. We will now be realigning our strategies in accordance with the revised tax structure to ensure that customers can enjoy the benefits from these measures during the upcoming festive season.” Shradha Suri Marwah, President – ACMA“On behalf of the auto component industry, I extend our deep gratitude to the Hon’ble Prime Minister, Shri Narendra Modi, and the Hon’ble Finance Minister, Smt. Nirmala Sitharaman, for this historic reform. The rationalisation of GST to a uniform 18% across all auto components has been a long-standing recommendation of ACMA. This decisive step will curb the grey market, encourage the use of quality compliant components, ease compliance, and support MSMEs – thereby strengthening the global competitiveness and resilience of India’s USD 80.2 billion auto component industry. We also welcome the GST Council’s approval for faster export refund claims through ICEGATE for smaller exporters, which will help clear pending shipping bills and significantly ease liquidity constraints.” Shenu Agarwal, MD & CEO – Ashok Leyland“The GST rate reductions announced by the Hon’ble Finance Minister represent a forward-looking step towards simplifying India’s tax structure and accelerating economic momentum. The shift to a streamlined two-tier system of 5% and 18% will not only ease compliance but also bolster key sectors, uplift consumer sentiment, and reduce the financial burden on the common man. Crucially, this move will help mitigate the impact of the recently imposed US tariffs. The specific relief for the commercial vehicle industry is especially welcome. On one hand, it will spur freight traffic, and on the other, it will bring down the cost of buses and trucks, unleashing demand trajectory for commercial vehicles.” Udit Sheth – Vice Chairman, Setco Automotive“The reduction in GST from 28% to 18% on auto components is a welcome step that will provide much-needed relief to both the auto industry and consumers and have a great impact on Total Cost of Ownership. For us at Setco, it will not only ease cost pressures but also stimulate demand, creating a positive ripple effect across the entire supply chain. We see this move as a catalyst for growth in the commercial vehicle sector, and we are optimistic about the momentum it can generate for the broader economy.” Kuldip Singh Rathee, Chairman and Managing Director – ASK Automotive Limited“We welcome the GST announcement by the Ministry of Finance, which is indeed a pre-festival gift for the entire nation. The next-generation two-slab tax structure marks a landmark reform for the Indian economy and will help ease the lives of the common man. We particularly appreciate the measures taken for the automobile sector, especially for small cars and two-wheelers up to the 350cc segment. This will provide much-needed relief to an industry that has been struggling for the last few years. The reduction of GST on entry-level vehicles from 28% to 18%, along with the retention of 5% GST on electric vehicles, will boost sales among first-time buyers and middle-income families, while also promoting new opportunities for personal mobility and last-mile connectivity. Moreover, the uniform 18% rate on auto components will strengthen the entire ecosystem by reducing ownership costs and improving supply chain efficiency. We are confident that this festive season will set new benchmarks for the Indian automobile sector.” Akshit Bansal, Founder & CEO – Statiq”By rationalising rates for vehicles and auto parts, these measures create a more inclusive, investor-friendly environment and accelerate the transition to clean transportation. The focus on making EVs and their components more affordable will benefit manufacturers, innovators, and consumers alike. Importantly, maintaining the 5% concessional GST rate on all electric vehicles clearly demonstrates the government’s commitment to clean mobility and ensures India remains on course for widespread electric vehicle adoption. However, it is now essential to align the GST structure for charging infrastructure with the same 5% slab as EVs themselves. This step would not only catalyse further investments in the charging network but also help build a seamless, robust support system for electric mobility across the country. Statiq applauds the government’s vision for a simplified, citizen-centric GST that empowers the next phase of automotive transformation and looks forward to continued policy support in expediting the development of India’s EV charging ecosystem.” Deepak Jain, Chairman – Lumax Group”We welcome the Government’s decision on GST reforms and rationalisation. By lowering GST to 18% across all components, will reduce input costs, creating a stronger foundation for innovation, localisation, and long-term competitiveness. Importantly, consumers will benefit from more affordable vehicles and reliable spare parts in the aftermarket, improving both safety and ownership experience. The reforms, well timed, will also bring optimism ahead of the festive season, with demand expected to rise across entry-level passenger vehicles and two-wheelers.” Rajeev Kapur, President – Helmet Manufacturers Association“We wholeheartedly welcome the Government’s landmark step to rationalise GST and lower rates on essential and medical products. This progressive reform will ease consumer burden and provide a much-needed boost to critical sectors such as healthcare, farming, and the auto industry. Such measures not only strengthen industry growth but also reinforce India’s commitment to improving ease of living for its citizens. However, it is disappointing that helmets—an undisputed life-saving device—have once again been overlooked in this exercise. India loses nearly 1.8 lakh lives every year in road accidents, with more than 30,000 of these being two-wheeler riders not wearing helmets. In states like Maharashtra, almost 67% of two-wheeler fatalities are directly linked to helmet non-use. By keeping helmets at the 18% GST slab, we are treating them as discretionary consumer goods, when in reality they belong alongside essential safety equipment. Extending GST relief and bringing helmets under the 5% slab will lower costs, encourage adoption of certified helmets, and most importantly, help save thousands of precious lives annually. We therefore urge the Government to urgently revisit this critical issue.” Get insights into Upcoming Cars In India, Electric Vehicles, Upcoming Bikes in India and cutting-edge technology transforming the automotive landscape. First Published Date: 04 Sept 2025, 14:44 pm IST
Source: hindustantimes.com