The Federation of Automobile Dealers Associations (FADA) has made a plea to the GST council to lower the GST rate on two-wheelers. FADA is urging for a reduction from the existing 28% to 18% in order to make two-wheelers more affordable and stimulate demand, which has experienced a significant decline in sales in recent years.
FADA has submitted its request for a GST rate reduction on two-wheelers to various key stakeholders, including the Finance Minister, who chairs the GST Council, all GST Council members, the Ministry of Heavy Industries, which oversees the automobile sector, and the Ministry of Road Transport & Highways.
Over the past few years, the prices of two-wheelers have witnessed a notable increase. Factors such as rising raw material costs, stricter emission norms, and higher taxes and levies have contributed to the price surge, making it more challenging for consumers across the country to afford two-wheelers. For instance, the price of the Honda Activa has risen from ₹52,000 in 2016 to ₹88,000 in 2023. Similarly, the Bajaj Pulsar, which was available for ₹72,000 in 2016, now costs ₹1,50,000. FADA highlights that the continuous price escalation has resulted in a decline in two-wheeler sales.
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In 2016, two-wheelers accounted for 78% of total automobile sales in the country. However, due to increasing prices, their contribution has dropped to 72% in 2023, according to FADA. The automobile body 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 rise in two-wheeler prices.
“Lowering the GST rate will enhance the competitiveness of two-wheelers compared to other modes of transportation, thereby boosting sales and revenue for the industry,” FADA stated. “Furthermore, the reduction in GST on two-wheelers will have a positive impact on the environment, as they are more fuel-efficient and emit fewer pollutants compared to other transportation modes,” the automobile body added.
FADA’s appeal for a reduction in GST rates on two-wheelers is aimed at providing relief to consumers, promoting sales growth, and reviving the overall two-wheeler industry in the country.