Reduce GST on 2-wheelers to 18%, says FADA

New Delhi: The Federation of Automobile Dealers Associations (FADA) has submitted a critical representation to the GST Council, urging an immediate reduction in the GST rate on two-wheelers from the current 28% to 18%.

This 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.

Manish Raj Singhania, president, FADA, affirmed, “The two-wheeler industry is at a critical juncture, grappling with unprecedented challenges such as rising inflation, stringent emission norms and the post COVID-19 effects in Bharat of India. 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.”

FADA’s appeal has been forwarded to the finance minister, chair of the GST Council, all GST Council members, the ministry of heavy industries, which supervises the automobile sector and the ministry of road transport and highways.

Over the past few years, the prices of various two-wheelers have risen significantly, impacting their affordability for consumers across India. This surge in prices can be attributed to multiple factors, including the rising cost of raw materials, stricter emission norms and higher taxes and levies.

For instance, the price of the popular Honda Activa has escalated from Rs 52,000 in 2016 to Rs 88,000 in 2023. Similarly, the Bajaj Pulsar has seen a substantial increase from Rs 72,000 in 2016 to Rs 1,50,000 in 2023. The Hero Splendor and TVS Jupiter have also experienced considerable price hikes over the same period, with their prices soaring from Rs 46,000 to Rs 74,801 and Rs 49,000 to Rs 88,498, respectively. The continuous rise in two-wheeler prices has consequently led to a decline in sales, emphasizing the pressing need for intervention and GST rate reduction to restore the industry’s growth trajectory.

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.