Bajaj Auto Ltd. Pulsar motorcycles sit ready at the end of the assembly line at the company’s factory in Pune, India, on Monday, July 5, 2010. Bajaj Auto Ltd., India’s second-largest motorcycle maker, scrapped plans for a low-cost car maker with Renault SA and will instead supply vehicles to the French company. Photographer: Kuni Takahashi/Bloomberg
| Photo Credit: KUNI TAKAHASHI
The Federation of Automobile Dealers Associations (FADA) said it has submitted a representation to the GST Council urging immediate reduction in the GST rate on two-wheelers from the current 28% to 18%.
“This timely and decisive intervention is aimed at making two-wheelers more affordable, reviving demand and reinvigorating an industry that has seen a significant slump in sales over the past few years,” FADA said in a statement.
Manish Raj Singhania, president, FADA said, “The two-wheeler industry is at a critical juncture, grappling with unprecedented challenges such as rising inflation, stringent emission norms and post Covid-19 effects.”
“Now is the opportune moment for the GST Council to reduce the GST rate on two-wheelers, making them more accessible for the common man, thereby providing much-needed boost to the industry, generating employment opportunities and fostering India’s overall economic growth,” he said.
Over the past few years, prices of various two-wheelers have risen significantly, impacting their affordability for consumers across India, FADA said.
For instance, the price of Honda Activa has escalated from ₹52,000 in 2016 to ₹88,000 in 2023. Similarly, the price of Bajaj Pulsar has increased from ₹72,000 in 2016 to ₹1,50,000 in 2023.
Hero Splendor and TVS Jupiter have also experienced considerable price hikes over the same period, with their prices soaring from ₹46,000 to ₹74,801 and ₹49,000 to ₹88,498, respectively, FADA said.
The continuous rise in two-wheeler prices has consequently led to a decline in sales.
“In 2016, two-wheelers accounted for 78% of the total automobile sales in India. However, due to continuous price increases since 2020, this contribution has fallen to 72% in FY23, underlining the impact of the steep price hike,” FADA added.
It believes that a reduction in the GST rate will address several critical issues facing the industry, including rural distress, the transition from BS-4 to BS-6 emission norms and the sharp increase in two-wheeler prices.
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