Bhubaneswar, Sep 8: India’s automobile industry is set to receive a major boost this fiscal year, thanks to the GST Council’s recent decision to rationalize tax rates.

According to a report by CRISIL Ratings, two-wheeler sales are projected to grow by 5-6%, while passenger vehicles (PVs) may see a more modest rise of 2-3%.

The revised GST structure, effective September 22, slashes rates on two-wheelers up to 350cc and small PVs from 28% to 18% — a move expected to increase demand by 200 basis points for two-wheelers and 100 basis points for PVs.

This comes at a crucial time, aligning with the Navratri and festive season, when consumer sentiment typically surges.

Anuj Sethi, Senior Director at CRISIL Ratings, noted that the GST cut could reduce vehicle prices by 5-10%, translating to savings of ₹3,000-₹7,000 on two-wheelers and ₹30,000-₹60,000 on small cars. Combined with new model launches and softer interest rates, the industry is poised for a strong second half.

Mid and larger PVs will also benefit from a 3-7% tax reduction, while tractors will see rates drop to 5% and 18% from the previous 12% and 28%. However, motorcycles exceeding 350cc will face a steep 40% special rate, making them more expensive.

With affordability improving and festive cheer in the air, India’s auto sector may be gearing up for a much-needed revival.

Written by: Saijyoti Banita Priyadarshini

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