The Federation of Automobile Dealers Associations (FADA) has submitted a crucial representation to the GST Council, urging a reduction in the GST rate on two-wheelers from the current 28% to 18%.
This timely intervention is aimed at making two-wheelers more accessible and affordable, thereby reviving demand and reinvigorating an industry that has faced a significant sales decline in recent years.
FADA President, Manish Raj Singhania, highlights the critical state of the two-wheeler industry, facing unprecedented challenges such as rising inflation, stringent emission norms, and the Post-Covid-19 effects. He emphasizes that now is the opportune moment for the GST Council to lower the GST rate on two-wheelers, making them more accessible to the common man. This reduction would provide the much-needed boost to the industry, generating employment opportunities and fostering India’s overall economic growth.
FADA’s compelling appeal has been forwarded to key authorities, including the Finance Minister, the chair of the GST Council, all GST Council members, the Ministry of Heavy Industries, and the Ministry of Road Transport & Highways. The broad dissemination of this representation underscores the urgency and significance of the issue at hand.
Over the past few years, the prices of two-wheelers have significantly increased, impacting affordability for consumers across India. Factors such as rising raw material costs, stricter emission norms, and higher taxes have contributed to this surge in prices.
For instance, popular models like the Honda Activa, Bajaj Pulsar, Hero Splendor, and TVS Jupiter have witnessed substantial price hikes, resulting in a decline in sales. FADA emphasizes the need for intervention and GST rate reduction to restore the growth trajectory of the industry.
Two-wheelers have historically accounted for a significant portion of automobile sales in India. However, due to continuous price increases, their contribution has fallen from 78% in 2016 to 72% in FY23. FADA believes that a reduction in the GST rate will address critical industry challenges such as rural distress, transitioning to BS-6 emission norms, and the sharp increase in two-wheeler prices. This move will enhance competitiveness, increase sales, and boost revenue for the industry.
Lowering the GST rate on two-wheelers will not only benefit the industry but also have positive environmental implications. Two-wheelers are more fuel-efficient and emit fewer pollutants compared to other heavier transportation modes like cars. By promoting the use of two-wheelers, this reduction will contribute to a cleaner environment.
FADA expressed the anticipation that the GST Council and the concerned ministries will give serious consideration to their appeal and take necessary steps to reduce the GST rate on two-wheelers.
This measure will not only benefit the industry but also the common man, the environment, and the Indian economy as a whole. FADA’s representation marks a significant effort to revive the two-wheeler industry and stimulate economic growth in the country.
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